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Brazil - Energy Sector Reform Loan Project (Inglês)

The Energy Sector Reform Loan Project will support the Government of Brazil's efforts to restore the normal functioning of the power sector following the recent energy supply crisis, as well as address the immediate regulatory problems that were the underlying cause of the crisis. Regulatory reforms will be focused on setting electricity tariffs at cost recovery levels, allowing an adjustment over time, to thus restore incentives for private sector investments. Implementation of market reforms will improve competitiveness in the wholesale power, and gas supply markets, and remove barriers to private sector investment. Access to electricity will be improved for low income rural consumers, while tariff policy will be modified to ensure affordable electricity tariffs for low income urban consumers. However, two significant elements of risk have been identified: 1) weak institutional capacity to implement key regulatory, and policy reforms; and, 2) potential political constraints, given the uncertainty that the new administration (to take office on January 2003) may not share the same long-term vision for the energy sector. Both risks may be reduced through the parallel Energy Sector Reform Technical Assistance Loan, which incorporates institutional strengthening measures, as a vehicle for continued dialogue with the government.




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