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What's Brazil "country risk"?
What's Brazil "country risk"?
Anyone who needs to make energy related investment decisions has to quantify the country's risk.
One way I realized to be very frequent, especially among multinational companies, is to define an interest rate that includes two parameters: the one for the return on investment and the other for the country's risk.
The cost of an investment in Brazil - considering the two parameters - is about 20% higher than those of safe, stable countries with solid economies.
For example: a project for a photovoltaic solar system to be installed in an administrative building of a large multinational company, results in something like 20% more in Brazil than in a first world country. Just to include the country’s risk.
If Brazilians decide to face our institutional weaknesses in the energy arena, then we can aim for levels of competitiveness.
In the meantime, we will continue as market laggards.
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