Beginning of the year. It’s time to assess the market scenario and prospects. And one of the main concerns is whether to invest more or seek alternatives to reduce costs.
But before going into details about the energy sector, it’s necessary to evaluate the macroeconomic scenario. The forecasts are unanimous and indicate that the Brazilian GDP is expected to register a decline of over 3% in 2015. Regarding the industrial GDP, there are projections showing a slowdown of up to 6.5%.
The Focus Bulletin, which weekly reveals the average market perspectives, suggests a reduction of 3.65% for last year. For 2016, the reduction in household consumption already projects an economic contraction of over 1.5%. On average, the Focus Bulletin indicates a further decline of 2.65% this year.
According to economist and Insper professor Otto Nogami, this drop should be more pronounced, and the economic contraction could reach 3.18%. If the scenario is confirmed, it will be the first time in Brazil’s history that the economy will have two consecutive years of GDP decline exceeding 3%.
One of the concerns is what is called the “recessionary spiral.” With the decline in domestic consumption, there is a drop in production, which in turn causes a decrease in employment and income. With the drop in income, there is further reduction in consumption, creating the recessionary spiral.
Investments could be a factor capable of breaking this cycle. However, the government’s fiscal scenario negatively contributes to this movement. According to Professor Nogami, forecasts show a sharp decline in investment rates, affecting all sectors, including the electric energy sector.
Despite the recent statement by the executive secretary of the Ministry of Mines and Energy, Luiz Eduardo Barata, that the country is not at risk of supply shortages, the future is uncertain, and the risks are significant. The freezing of tariffs in recent years has caused great disorganization for generators and distributors.
The adjustment allowed in 2015 was directed to replenish the companies’ cash flow and not intended for new investments. And when there are no investments, not even for the maintenance of distributors, a medium and long-term problem is created.
Nogami points out that there are plants ready to start operating, but due to lack of public initiative, some transmission lines have not been built. “The sector is already at its peak. And what we observe is a general paralysis with medium and long-term planning,” he says.
In this context, the operation of thermoelectric plants becomes relevant, but it depends on fuel, which in turn follows international prices. There is even a movement to attract Chinese capital for a thermoelectric plant in the south of the country as a short-term solution.
Thus, throughout this year, the risks regarding energy supply continue. It will be necessary to seek alternatives to maintain production and reduce the risks of being negatively impacted by the absence of energy. The tip is to do the math and identify the best solutions for each type of demand.
