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World Cup Outlook Brightens as Power Shortage Risk Eases

Brazil has some good news for soccer fans arriving for the World Cup this month: the lights probably won’t go out.

The risk of power shortages in the southeast region -- including Sao Paulo, where Brazil will take on Croatia in the June 12 opening match -- has fallen to about 4 percent from 6.7 percent in May, Deputy Energy Minister Marcio Zimmermann said.

The probability of authorities having to ration supply for the first time since 2001 is diminishing after rains last month replenished some of the water lost from hydroelectric dams in the worst drought in more than 40 years. On March 31, Citigroup Inc. put the chances of rationing at 94 percent. Secure power supply means one less concern for organizers of an event whose buildup has been beset by cost overruns and project delays.

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“We are very assured that there won’t be any risk,” Zimmermann said in an interview from Brasilia today.

The government plans to make an official announcement on rationing risks after a meeting of the electricity monitoring committee on June 11, a day before the World Cup starts.

Any preemptive move to ration supply would have hurt the economy needlessly, Zimmermann said.

The ministry isn’t studying additional aid to utilities, after authorizing in March financing to buy power on the spot market at record high prices, while generators must deal with cost increases resulting for diminished hydroelectric production on their own without government help, he said.

Interactive Graphic: Bloomberg Visual Data

Interactive Graphic: Bloomberg Visual Data

To contact the reporter on this story: Mario Sergio Lima in Brasilia Newsroom at mlima11@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net Robin Saponar

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