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Electricity Privatization in Brazil

Electricity Privatization in Brazil
Privatized electricity distribution companies, strangling working people with high electric bills . . .

Carlos Latuff is a Brazilian cartoonist.  Cf. “On one hand, daily productivity gains made by professionals working in the electricity sector are not reflected in their salaries.  On the other hand, consumers are already paying high costs at the end of each month.  ‘The rise in Brazilian electricity prices, not coincidentally, happened on the eve of the process of privatization.  The measures taken for privatization transformed electricity prices, which had been tied to hydro power generation costs, by anchoring them to the costs of thermal power generation.  Politically, what was done was to institutionalize the commodification of Brazilian electricity prices.  Remember that this was done exactly at the same time as the Real Plan, which reduced inflation to practically zero, was implemented.  That obscured the exploitative maneuver of increasing the electricity costs for the popular classes in Brazil,’ Professor Dorival Gonçalves explained” (“Energia, recursos minerais e desenvolvimento em pauta,” Fisenge, June-July 2011); “According to ANEEL, the average price of electricity has increased 102.4% from January 1995 to October 2001, or 13.5% above inflation in the period.  In the same period the residential consumer had an average price rise of 30.5% above inflation.  The situation has worsened after 1999, when a 70% maxi-devaluation of Brazilian currency took place.  These increases of electricity prices caused a heavy burden on the budgets of low-income households.  Besides, high prices of electricity and liquefied petroleum gas (LPG) have strong negative environmental side effects, since the poorer population switches to the use of cheaper options for their energy needs, leading to additional use of wood fuels, instead of LPG” (Harald Winkler, André Felipe Simões, Emilio Lèbre la Rovere, Mozaharul Alam, Atiq Rahman, and Stanford Mwakasonda, “Access and Affordability of Electricity in Developing Countries,” World Development 39.6, June 2011); and Jeff Tan, “Infrastructure Privatisation: Oversold, Misunderstood and Inappropriate” (Development Policy Review 29.1, 2011).

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