Brazil’s government studies assisting energy distributors with new credit lines

energy credit
Photo: Jose Luis Stephens/Shutterstock

The Brazilian government is studying the possibility of offering new credit lines to energy distributors to help them cope with the financial downsides of the current electricity crisis. To ensure the supply of electricity in place of that generated by hydroelectric plants — heavily affected by the water crisis — distributors are having to bear the increased costs of thermoelectric operations. 

The idea of resorting to the new financing program came from the Mines and Energy Ministry along with the Brazilian Association of Electric Energy Distributors (Abradee), and members of the Economy Ministry and Brazil’s energy regulator Aneel. In a statement, the Mines and Energy Ministry acknowledged the situation occurs “due to the exceptional measures adopted to face the situation of water scarcity, as well as its impact on the production chain.”

“[The ministry] is studying possible solutions that aim to mitigate the mismatch observed between the revenues collected by electricity tariffs and their expenses on power generation, including a credit operation in the format of the ‘Covid-Account’.”

The measure, created at the beginning of the pandemic, consisted of loans taken by distributors and paid for by customers, by way of electricity bills.