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Brazil Pinning Economic Recovery On Tax Reforms

A new set of sweeping energy tax sector reforms announced recently by Brazilian President Dilma Rousseff is intended to reenergize the country's once-booming economy.

The measures -- effective Jan. 1, 2013 -- are intended to reduce consumer power rates by as much as 16.2% by lowering utility production costs by 19.7 to 28%.

"This is the biggest reduction in electricity rates that the country has ever seen," Rousseff said after signing the measures this past week. "Reduced energy costs will improve Brazil's international standing, slow inflation and encourage investment. It will benefit both the businessman and the consumer."

Chief amongst the measures included in the reform package are the renewal of 73 power concessions that are set to expire between 2015 and 2017.

These extensions -- which include 20 generation, 44 distribution and nine transmission contracts -- will last a maximum of 30 years and will prevent current concession holders from having to bid in auction to regain their control.

Brazil's Ministry of Mines and Energy says the contracts are equivalent to about 22 MW-worth of power generation, 85,000 km of transmission lines, and 35% of consumer market distributors.

"It's going to reduce production costs, increase productivity for businesses, lead to more jobs and guarantee growth," Rousseff says. "All of Brazil is going to benefit."

Rousseff says the cuts are possible in large part because of Brazil's hydropower network, which accounts for more than 90% of the country's total energy production.

"Their duration is longer than the period of the concession and amortization," Rousseff says. "It is this factor that allows us to deliver cheaper energy prices to Brazilian consumers."

In other Brazilian news, HydroWorld.com reported earlier this month that Companhia de Desenvolvimento dos Vales do Sao Francisco e do Parnaiba (Codesvasf) is seeking bids for civil construction of the 8.25-MW Jequitai 1 project.

Members of the hydroelectric industry are also encouraged to attend HydroVision Brasil 2012, which begins later this month.

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