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Brazil: How much does the country risk cost?

Rafael Herzberg's picture
Consultant energy affairs, Self employed

Rafael Herzberg - is an independent energy consultant, self-employed (since 2018) based in São Paulo, Brazil * Focus on C level, VPs and upper managers associated to energy related info,...

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  • Jul 6, 2022

Brazil: How much does the country risk cost?

Political uncertainties, the fragility of the economy, legal uncertainty regarding contracts and laws and the lack of predictability make Brazil more expensive than the most disciplined countries.

And how are these premises reflected in electrical power sector?

In the cost embedded in the interest rates demanded by investors who develop projects to expand the capacity of the power supply chain.

In "well-behaved" countries the embedded interest rate is on the order of 1.0% per month! Here in Brazil, it is hardly less than 1.5% per month.

Thus, the amortization of investments of USD 3 thousand/kW (generation, transmission and distribution), considering the period of 20 years here, in Brazil result about 40% higher than in serious countries.

And so what?

We are the 70th per ca-pita income in the world. It reflects a very poor country. To move to the forefront we need to change our assumptions and associated behaviors.


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Rafael Herzberg's picture
Thank Rafael for the Post!
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