POWER February 2012 - 50

POWER IN BRAZIL
Eletrobras President Sees a Future Full of Opportunities
Eletrobras President José da Costa Carvalho
Neto spoke with Global Business Reports in
September. The interview has been edited for
length.
Eletrobras is a semi-public company,
partially open to private shareholders but
controlled by the Brazilian federal authorities.
What are the pros and cons of being a
public company?
Let's start by clarifying terminology. Eletrobras
is a public company whose shares are
traded on the Brazilian stock market. The company
is also listed at Latibex (Bolsa de Madrid)
and the New York Stock Exchange (ADRs level
2). The major and controlling shareholder is
the Brazilian State.
Considering the extension of the Brazilian
interconnected electricity grid and the associated
challenges, we have the advantage
of being a preferred partner of the Brazilian
Government. Our central role in the Brazilian
market is recognized by other players as they
manage to build partnerships with Eletrobras
in new projects.
On the other hand, as a state-owned company,
we still have institutional and legal
constraints that somewhat undermine our
competitiveness. We have, however, been very
successful in negotiating the removal of some
of them in the last years, like the restriction on
the internationalization of our operations.
Eletrobras' generation portfolio is based
on hydroelectricity, thermoelectricity, and
thermonuclear. What is its stance on the development
of nonconventional renewables?
Our Strategic Plan for 2010-2020 states as
our vision to become by 2020 the largest global
clean energy company. One of our five strategic
business objectives is to maximize the production
of clean energy, including new sources.
We have been building a strong position in the
new wind energy market in Brazil with more
than 600 MW in wind parks to be put in operation
by 2014 and are starting an experimental
project with photovoltaic generation.
Since rationing during the 2001 energy
crisis, many aspects of Brazil's energy
framework have changed. Is the Brazilian
energy model now finally polished, and
what issues are still to be addressed?
When one observes the huge development
of the energy industry worldwide in the last
years and the new challenges regarding energy
security, accessibility of energy supply, and
environmental impact mitigation, one could
50
hardly say that any country's energy model is
finally polished. The Brazilian energy model
and regulatory framework have three pillars:
security of supply, access of electric energy
services to the whole population, and a moderate
energy cost for the end consumer. It
involves, however, constant evolution, adjusting
to emerging issues like nonconventional
renewables, the integration of electric systems
in South America, environmental restrictions
on large dam hydroelectric plants, and so on.
The possibility of renewing 20% of generation
contracts and close to 80% of transmission
assets in 2015 has brought much
uncertainty to the Brazilian energy industry.
What is Eletrobras' position on this?
Our position is to work to keep the five pillars
of the current model of the Brazilian electricity
industry: reliability, quality, low tariffs,
sustainability, and universality of the energy
produced and transmitted in the country. So
we are, corporately, in favor of the renewal of
all the concessions of generation and transmission
assets. Eletrobras is prepared, however,
for a contrary decision by continuing to invest
in business efficiency to compete in existing
assets and those of system expansion.
The steady increase in Brazilian energy
demand has attracted many companies.
How has increased competition affected
Eletrobras operations?
As the undisputed leader of a thriving electric
energy market, Eletrobras welcomes the
incoming players as potential new partners,
since the expansion of the Brazilian power
grid requires a huge amount of investment.
The increased competition obviously requires
Eletrobras to be more cautious regarding new
projects' evaluation as well as operation and
maintenance costs. I would say that there is
place for everybody in such a complex market.
Nonetheless, the biggest and more challenging
projects remain our strategic target.
Because of its generation capacity and exponentially
growing demand, Brazil is an energy
colossus. What will be the role of Brazil
in the South American energy network?
The Brazilian electricity sector has a strong
feature in terms of energy optimization, not
only by the great diversity of generating
sources and interconnections, but also by the
complementary aspect of the primary sources
of generation. In the context of the goals of
UNASUL (which stands for " energy integration
for the complete, sustainable and supportive
www.powermag.com
use of resources in the region " ), Eletrobras is
reporting the experience of Brazilian energy
optimization and encouraging other countries
to conduct internal studies and participate in
forums in regional bodies to develop further
studies that will lead to the evaluation of existing
potential.
Studies are being developed to implement
robust transmission systems that may contribute
to this strategy and provide more facilities
for interconnection with other countries, like
the existing energy exchanges between Brazil
and Argentina, Paraguay, and Venezuela.
In 2008, Eletrobras became involved in
an ambitious process of internationalization.
What are its prospects in that area?
Eletrobras, since the creation of its international
area, has been seeking opportunities to
work in other countries in the generation and
transmission segment.
The initial strategy was grounded in a
strong performance in the Americas, like the
hydraulic [hydro] generation projects currently
under study in Peru, Colombia, Chile, Argentina,
Guyana, Suriname, Costa Rica, Nicaragua,
and Honduras, and wind farms in the United
States and Uruguay. Eletrobras has also sought
investments on other continents, as in the
case of Mozambique and Portugal.
The performance in the international market
should also take into perspective the creation
of new investment opportunities in other
countries and creating of new markets, bringing
new opportunities for Brazilian suppliers of
goods and services.
You have been at the head of Eletrobras
for a year. What have been the main challenges,
and what are your mid- to long-term
objectives for Eletrobras?
It has been a very exciting year. The move
from the private sector to a huge public company
like Eletrobras requires some adjustments
in your mindset, but I was helped by a very
supportive team.
Our main challenge in 2011 was to go
ahead with our strategic plan for the decade,
unfolding it in a mid-term business plan (still
in progress) able to address properly our different
business axes and to integrate more and
more our affiliate companies. With the important
guideline completed in the beginning of
2012, we will be prepared to face successfully
the new energy auctions in the Amazon region
and to build up a new management paradigm
for the Eletrobras system.
POWER | February 2012
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POWER February 2012

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