Tragedy staged by amateurs
André Furtado remembers that privatizing the energy sector
It's not a good idea even in the United States

WANDA JORGE

a story that couldn't really work. The Brazilian privatization program, which includes the energy sector, was born with the goal of resolving the balance of payments and not to resolve the announced crisis. Some of the main agents, such as researchers, directors of state-owned companies and the government's own technical team, were fully alert to the evidence of a bankruptcy in the energy area, but did not have the political strength to reverse the actions taken. Faced with the requirement for high long-term investments, the lack of these resources in the Brazilian private and public sector opened the flank for the attack of foreign capital, with all its strength.

Professor André Furtado, from the Department of Scientific and Technological Policy at Unicamp's Institute of Geosciences (IG), states that it is not the case to attribute to the Fernando Henrique government the role of the sole protagonist in this tragedy. It includes Brazilian society on the amateur stage. After all, a government does not translate into a monologue and the other agents on the scene are co-authors of the disaster. The privatization model was careless and, in comparison, liberalized more than the United States, the main reference for this current of thought and where to this day this is not 'a good idea' in strategic areas such as energy. Brazil committed the sin of staging a script that did not work. For the audience in the main box, occupied by foreign capital, the frenetic resumption of consumption, celebrated in the first half of the current government, received a standing ovation: it was interesting, yes, but only paid admission where the sale was greatest. Special prices for an appetizing dish: hydroelectric plants.

“With a 94% stake in the Brazilian energy matrix and plans to amortize that heavy long-term capital already realized, the moment was one of joy: high profits, with tariffs already put in place by the government and low operating costs”, he recalls. the teacher. In the piece put together by FHC's team, “some details” were missing, such as mechanisms for transferring this profitability to finance new hydroelectric plants and also thermoelectric plants. After all, thermal energy should be a supporting factor in this great challenge of generating light for a growing country.

Furtado, who collaborates with the Energy Planning program at the Faculty of Mechanical Engineering (FEM), teaching the Energy Economics discipline, remembers that these factors were not in the original script. The public deficit prevented investments of such size. The World Bank had already warned that financing state energy would be “never again”. And private foreign capital does not operate within the sector's logic of interdependence, which often needs to transfer energy to where it is needed and not where it is most profitable.

Populist character – Total energy privatization is not a good idea – it has already been said – not even in the United States. They know that there is no need to play with the safety of the population, as it yields votes. “The smartest measure would be an opening to the private sector in a partnership system, which would give greater control of the process in such a strategic area.” Furtado adds that, in this way, it would be possible to leverage investments without compromising supply, meeting the investors' other desires, which were profit and little willingness to pay for long-term works.

The professor assesses, however, that the FHC government's desire, at least in its first phase, was different. “Populist in nature, the government left consumption free, without rules, in a climate of certain euphoria that interested it: the population consumed, bought new devices, heated up the industry and dealerships”, points out the researcher. This heat of consumption created an attractive scenario for foreign investors, partners in the government's dream of purchasing state-owned companies. But only hydroelectric plants were of interest. After all, what investor would get involved with thermoelectric plants, which have higher operating costs and which would face inexorable price competition with hydroelectric plants, capable of overthrowing them.

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Energy Policy Council
It took 3 years to come together

Coldly analyzing the spectacle, the Unicamp professor identifies the complete lack of planning as the villain. Furtado recalls that, in the last decade, as the announced crisis approached, emergency measures were taken. In 1997, the supra-ministerial National Energy Policy Council was created with this objective. Its agility, however, left something to be desired: the first Council meeting took three years to take place. When it was realized that there was no strategic plan for the energy issue, it was not known which model was appropriate and most viable for Brazil, nor what to do with the restriction of consumption, which was necessary, but which brought with it the impact of at least 10% in the fall in industrial activity.

Without blaming the government as the exclusive agent of the staged tragedy, the researcher recalls that the rational use of energy in the domestic sector, the first to respond to the proposal to curb waste, should be an everyday reality from now on. For the industrial area, which does not waste, as it is an input that weighs on each company's accounting, this could be the starting point for the use of new technologies that use less energy, such as co-generation.

“From the government, which is reaping the rotten fruits of the lack of planning, we can only hope that it recovers from its blind faith in the market and evaluates, more carefully, the import of international models”, considers Furtado. The inspiration in the British model of privatization of the energy sector was, to say the least, inattentive: it was forgotten that the gas distribution network there is already fully implemented and that this clean energy, in Brazil, can really be used, as a complement and strategic in dry season, but requires installation in the country, in addition to requiring long-term contracts. This scenario would lead to the unusual situation of, at certain times, having to throw away hydraulic energy to support thermal power and honor commitments made. This is really not a good idea.