Brasilia: Brazilian consumers and companies have lost nearly $4 billion (Dh14.6 billion) and could lose billions more in the coming years due to neighbouring countries' intervention in energy contracts, an industry report says.
Several neighbours have cut energy supplies to Brazil in recent years due to power shortages or a surge in nationalism.
The most notable case was Bolivia's 2006 nationalisation of its gas industry, which included the military occupation of assets owned by Brazil's state-oil company Petrobras.
Argentina and Venezuela also violated contracts to supply gas and power, respectively, while Paraguay renegotiated terms on the Itaipu hydroelectric plant it shares with Brazil, noted the study by energy industry group Instituto Acende Brasil, which was obtained by Reuters prior to its publication.
It said the costs had been exacerbated by Brazilian President Luiz Inacio Lula da Silva's good neighbour policy toward South American neighbours that has prevented it from taking a tougher stance against contract violations.
Acende's study found that the nationalisation moves cost Brazilian consumers, investors and taxpayers 6.7 billion reais (Dh14.2 billion) over the past decade and could cost them twice that over the next decade.
"The reaction of the Brazilian government over the past decade has been quite foreseeable, always accommodating demands and interventions of our neighbours, generating billions in costs," said the report.
Supply shortages from its neighbours led Brazil to adopt a series of emergency measures, which Acende said cost 2.3 billion reais between December 2007 and January 2009.
Tax hike
US-based AES had to shut down a power plant in southern Brazil in April 2009 due to an unexpected tax hike and restrictions on gas exports by the Argentine government.
AES continued to seek solutions to allow the resumption of the plant's operations, a spokeswoman said on Thursday.
The report coincides with growing investor concern over more government intervention and a bigger role for state companies if front-runner Dilma Rousseff, who was Lula's energy minister and later chief of staff, wins the October 3 presidential election.
