Construction & Architecture Brazil Market Report

1. Know the market basics

A. Numbers

Brazil, Brazilian, Construction, architect, engineer, contractor, constructor, AEC, EPC,
subcontractor, general contractor, construction technology, information technology, building products, buildings,
Architectural Record, design build, ENR, Engineering News Record, commercial buildings, building product manufacturers,
construction equipment, power, construction cost index, building owners, construction law, engineering, architecture,
architectural, lawyers, attorneys, legal, national, international, designers, agreements, project finances, project financed,
design-build, designer-builder, engineer procure construct, engineer-procure-construct, facilities, facility
management, counsels, counseling, heavy, plants, rails, refurbishment, renewable resource,
renovated, seaports, space, systems, transit, warranties, wastewater, waterways, waterworks,
air carriers, air conditioning, bricks, bridges, builders exchanges, building codes, building
contracts, building inspectors, bureaus, carpenters, carpentry, carpets, catalogs, catalogues, CATV, ceilings, cement,
certificates, city, cities, civil, civil engineer, columns, concrete, concrete blocks, concrete forming, condos,
condominiums, conduit, blue book, bluebook, housing, maintenence, management, evaluation, erosion, Brazil Market,
Brazilian Importer, Distributor, Companies Database, Trade Assistance, Latin america, south america, report, stocks,
sales, Global Review, news, articles, newsletters, Advertising, market report, wholesaler, retailer, consumer, market analysis,
events, freight, logistics, invoicing, trade partner, business opportunities, mission, strategic advantages,
international project, Directory, Advertising, Consulting, Service, commercial associations, CD-ROM, campaign, investing,
Sao Paulo, industries, newspaper, telemarketing, direct mail marketingStructure

Electric Power Systems

The total Brazilian market for electrical power equipment,
including generation, transmission, and distribution segments
(GTD), is estimated to have reached $4.2 billion in 2002, up from
about $3.6 billion in the previous year in terms of local Brazilian
currency levels. Translated into dollars, this market dropped about
17% as a result of the devaluation of the Brazilian real against the
US dollar. Net revenues of the electrical power generation, transmission
and distribution service companies amounted to about
$12 billion in 2002, down from $23 billion in 2001.
The power distribution segment is expected to show a slight
recovery in 2003 compared to 2002 as a result of the five-year
tariff review that started in April 2003 and of higher power consumption
levels. (Note: In 2002, total power consumption in
Brazil dropped back to 1999 levels, or 290 TWh, after having
reached 306 TWh in 2000. Such low consumption in 2002 was a
direct reflection of the power rationing from June 2001 to
February 2002.)
Power consumption habits have gradually begun to recover as
of the first semester of 2003, but trade sources still do not expect
substantial power consumption growth due to the current slowdown
of the Brazilian economy. As a consequence, the power distribution
companies (DISCOs), which saw their revenues shrink in
the last two years because of reduced power consumption and
high debts contracted in dollars, are expected to prioritize investments
in 2003 focusing mostly on reducing technical and commercial
power losses. To this end, they are expected to invest in
effective electricity measurement controls and in client database
management. Additionally, they should continue energy delivery
quality programs by installing supervision and control systems to
avoid penalties from the Brazilian power regulator (Aneel). (Note:
Aneel has recently installed online monitoring systems to track
the frequency and duration of electricity interruptions.)
Another area in which the DISCOs will need to invest in order
to meet contractual obligations is the expansion of their distribution
networks to reach outer rural communities. A new Ministry of
Mines and Energy program has established deadlines on a caseby-
case basis. Some power concessionaires will need to conclude
the power expansion as early as 2010, and the latest will be in
2015. Reduction of these deadlines is also under evaluation, as
the new Brazilian administration is extremely socially oriented.
The power generation and transmission sub-sectors are
expected to grow only modestly in 2003, mainly due to uncertainties
in the power regulatory framework, which, along with complex
environmental permit processes, have delayed implementation of
planned projects.
The new Brazilian Minister of Mines and Energy who took
office in January 2003 has proposed changes to the power regulatory
framework. A new model is under evaluation and is likely to
be sent to the Brazilian Congress by mid-2003. The Brazilian government
is also proposing a new public-private partnership legislation
to attract private sector investment in infrastructure projects
in general.
The absence of clear rules, coupled with the fact that 2002
was an election year in Brazil, practically stalled investments in
power generation. The volatile exchange rate has also greatly
contributed to an unstable investment climate in Brazil. The thermal
power segment was the most affected, although imports of
gas turbines, which had grown substantially in 2001, continued
strong up to mid-2002, benefiting US suppliers. The gas-fired
power projects are directly influenced by the exchange rate value
as they depend on the natural gas imported mostly from Bolivia.
Moreover, gas supply contracts with take-or-pay and ship-or-pay
clauses are considered a serious deterrent to these projects.
The Priority Thermal Power Program (PTPP) which the
Brazilian government launched at the end of 1999, called for the construction of nearly 50 plants by 2003. However, only 11 such
plants totaling 4,441 MW have been concluded, most of which are
operating at partial capacity, generating just over 2,400 MW.
About 10 are under construction, but schedules are delayed.
Moreover, 17 projects are pending definition of new rules.
Beginning in 2002 during the power rationing, the Brazilian
government implemented an emergency diesel-fueled set of
power plants to serve as back-ups in the event of prolonged
rationing. Imports of diesel generators greatly increased during
that period.
Aneel was counting on 15,238 MW of new energy to be added
to the Brazilian interconnected power system in 2003, however
only about 6,850 MW are expected to operate commercially by
then. The remainder presents serious environmental and/or legal
obstacles that prevent operations.
To make up for the delays in the construction of power transmission
lines (TLs) as well, Aneel plans to open tenders in 2003
for the construction and operation of seven TLs totaling 1,797 Km,
ranging from 235 Kv to 525 Kv. These TLs are expected to generate
investments of about $700 million over 2003/2004. The government-
owned power transmission companies are expected to
be the primary players to secure needed investments in an area
considered crucial to avoid future power rationings.
Outlook: Industry specialists predict that Brazil may
face further power rationing if new power generation and transmission
projects do not come on line by 2005 to meet demand that is
anticipated to result from a recovery of the Brazilian economy.
 

Competition

Opportunities

B. Reference Prices

Retail

Wholesale

Equipment

2003

D. Important Players

Poultry

Slaugther equipment

Beverage

E. Associations

Associa?o Brasileira da Ind?tria de Fundi?o - ABIFA

Associa?o Brasileira da Ind?tria de Tubos e Acess?ios de Metal - ABITAM

Associa?o Brasileira da Infra-Estrutura e Ind?trias de Base - ABDIB

Associa?o Brasileira das Empresas de SErvi?s de Concretagem - ABESC

ASBEA?Associa?o

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