Brazil to Cut Growth Forecast on Economic Slowdown (Update3)

By Iuri Dantas and Jeb Blount
Feb. 6 (Bloomberg) -- Brazil will reduce its growth forecast because of the global credit crunch and economic slowdown, Energy Minister Edison Lobao said.
Before recessions in the world’s largest economies, Brazil had expected average annual economic growth of 4.9 percent between 2008 and 2017, Lobao said today during public hearings on a revised 10-year energy plan. Revisions to the annual figures are expected in March or April.
“The economic crisis will lead us to revise the projects,” Lobao said. “In the reference scenario we have 4.9 percent annual growth and the economic crisis will lead us to revise this.”
Brazil needs to add 50,000 megawatts of electricity generation capacity over the next decade to meet an expected expansion in consumer and industrial demand, Lobao has said. The increase would be enough power for the homes of 142 million Brazilians, or 75 percent of its existing population, according to the ministry’s Web site.
Reduced growth and power demand has helped eliminate the risk of energy shortages and rationing this year, Lobao said.
“I don’t believe the energy consumption will fall so much with the crisis,” Mauricio Tolmasquim, head of the country’s energy research agency, told reporters in Brasilia. “If we have by chance a drop in the energy demand, it will bring lower prices for consumers.”
Investment Needs
Brazil will need 767 billion reais ($339 billion) of investment in energy projects by 2017, Tolmasquim said today in a separate e-mail statement.
Of that amount two-thirds or 536 billion reais will be needed for oil and gas investment, 181 billion reais will be for electric power investments and 50 billion reais will be for bio- fuels, the agency said.
The government also seeks to limit increases in demand by helping residential consumers exchange old refrigerators for new ones that use less energy.
Under the plan, which is scheduled to begin in the second half of this year, the country will help consumers replace 10 million old refrigerators with energy-efficient models, Lobao said. The savings on electricity will pay for the new models.
The government also expects to add additional wind and thermal-fired power plants, Lobao said. The use of more coal, natural gas and oil will reduce hydroelectric power, now responsible for 85 percent of Brazil’s electricity, to about 75 percent, he said.