November 11, 2009 / 7:08 PM / 9 years ago

ANALYSIS-Brazil blackout a glitch, but shows investment need

* Brazil’s electricity reliable despite major blackout

* Power problems unlikely to affect economic growth

* Gov’t needs better coordination to control outages

By Brian Ellsworth

SAO PAULO, Nov 11 (Reuters) - Brazil’s huge power blackout highlights the need for major investments to ensure its infrastructure keeps pace with its robust economic growth, but does not signal systemic risks likely to hurt the economy.

The outage sparked problems ranging from public transport stoppages to hospital emergencies, demonstrating challenges facing a nation whose expanding industries and quick rebound from the global crisis have made it a Wall Street darling.

But experts describe the five-hour outage on Tuesday as an isolated incident similar to those that have occurred in countries including the United States and not a repeat of problems that forced Brazil to ration power eight years ago.

"Brazil does not have a problem with electrical supply — the system is reliable, even if it faces the risk of this sort of problem," said Cesar de Barros Pinto of Abrate, a Brazilian electrical transmission industry association.

"This is very similar to a plane crash — nobody wants it to happen, everyone tries to avoid it, but sometimes it happens."

The country, which will host the World Cup and the Olympics in the next seven years, has made advances in the electrical sector since a 2001-2002 crisis when low rainfall reduced output at hydroelectric plants that provide more than 80 percent of Brazil’s power. That left the country without enough generation and forced power rationing.

Tuesday’s blackout, in contrast, was sparked by failures in transmission lines linking Brazil to the Itaipu hydroelectric dam that straddles the border with Paraguay and provides nearly 20 percent of Brazil’s power.

President Luiz Inacio Lula da Silva on Wednesday denied the problem was caused by under-investment and called on the country’s energy minister to explain the cause of the outage, which government officials said appeared to have been caused by severe weather.[ID:nN11369721]

Lula’s government has built new thermoeletric plants that help prevent blackouts at times of low rain, while increasing connections within the national grid that allow greater flexibility to move electricity to places that need it.

DAMAGE CONTROL

Analysts said occasional blackouts are inevitable but were still surprised that a transmission problem in southern Brazil affected states hundreds of miles to the north and left nearly half the country in darkness.

"There needs to be better management of the electrical sector, the problem should not be played down," said Luiz Pinguelli Rosa, former president of state-run electricity giant Eletrobras (ELET5.SA). "There is a problem with management of accidents."

Brazil, Latin America’s largest economy and country, has always faced tremendous challenges in distributing power across its vast territory that requires an extensive network of transmission lines through often isolated areas.

"Problems always come up, but they shouldn’t be affecting so many states," said Otavio Santoro, Executive Director of consulting company Indeco Energia.

"The energy ministry needs to improve coordination so that these problems can be isolated."

He said plans for a raft of new generation projects, including the environmentally controversial Belo Monte dam in the Amazon that would have nearly the capacity of the giant Itaipu, will likely give the system greater stability.

(Editing by Stuart Grudgings and Vicki Allen)








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