Brazil prepares decree that could lead to electricity rationing in drought

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A man rides a bicycle near power lines connecting pylons of high-tension electricity, in Brasilia, Brazil August 31, 2017. REUTERS/Ueslei Marcelino

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BRASILIA, June 14 (Reuters) - Facing its worst drought in almost a century, Brazil's government is preparing a temporary decree that could lead to electricity rationing, according to a draft of the measure seen by Reuters on Monday.

The decree, which would need later approval by Congress, would set up a commission that could decide on more drastic measures to control the use of electricity if there are shortages that threaten to slow Brazil's economic recovery.

President Jair Bolsonaro has not approved the decree but will meet with cabinet ministers later on Monday to discuss it.

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The Mines and Energy Ministry said in a statement that the government and state agencies are working "incessantly" to guarantee energy security and avoid having to ration electricity this year in what it termed a "critical juncture."

Even though around 65% of Brazil's generated electricity comes from hydroelectric dams, the country has well diversified its energy matrix since the mandatory electricity rationing of 2001, the ministry said.

Brazil has more than doubled its power transmission lines, to more than 164,000 kilometers (101,900 miles), allowing "consumers in one corner of the country to consume electricity generated in another" thus reducing dependence on local sources of energy.

The drought will force Brazil to depend more heavily on costly thermal power to compensate for reduced hydroelectric generation due to low water levels in reservoirs, the National Electric Grid Operator (ONS) said last week. read more

The country's Electricity Sector Monitoring Committee - made up of government and technical bodies, including the ONS - approved potential measures to meet demand such as extra thermal generation and importing energy from Argentina and Uruguay.

Brazil's worst drought in almost a century has already driven up spot electricity prices 40% this year, raising costs for large industrial consumers, electric market executives said.

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Reporting by Lisandra Paraguassu

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