Institutional framework changes in Brazil's energy industries

The liberalization of the Brazilian energy sector in the 1990's was meant to drastically reduce the role of the State in the sector. This reform has not had the desired results. Private investment could not guarantee the expansion of the Brazilian energy sector at the necessary speed. The first half of this decade has been marked by problems of electricity supply and a rather timid role of private investment in boosting energy supply. During the second half of the decade, liberal reform of the energy sector in Brazil has gone through major adjustments, marked by the search for a new compromise between the role of the State and the private sector. This paper highlights the institutional evolution of Brazil's energy or industries and tries to show how risk for public and private investment has been reduced by the adoption of new institutional and economic mechanisms of coordination. In the current institutional framework, the State plays an important role in coordinating the investment process for the expansion of supply. The pace of investment in Brazil in the energy sector has accelerated significantly after the adoption of the new coordination mechanisms. (authors)