SAO PAULO, May 28 (Reuters) - Brazil's government agencies
warned of droughts this week as the country faces its worst dry
spell in 91 years, increasing fears of energy rationing, hitting
hydroelectric power generation and agriculture while raising the
risk of Amazon fires.
Late on Thursday, the Electricity Sector Monitoring
Committee (CMSE), which is linked to Brazil's Mines and Energy
Ministry, recommended that the water regulator ANA recognize a
state of "water scarcity," after a prolonged drought hit Central
and Southern parts of Brazil along the Paraná river basin.
Separately, a weather monitoring agency linked to the
Agriculture Ministry issued its first "emergency drought alert"
for June to September, saying rains are likely to remain scarce
in five Brazilian states during that period.
The lack of rain across much of Brazil has negative
implications for grain cultivation, livestock and electricity
generation, as Brazil relies heavily on hydro dams for its
power. The dry weather could lead to severe fires in the Amazon
rainforest and Pantanal wetlands, scientists said.
The CMSE said the lack of rain makes it important to relax
restrictions on some hydroelectric plants to allow greater
energy generation or more storage in certain regions. That will
require difficult talks with politicians, the ANA and
environmental protection agency Ibama.
"Energy rationing is not envisaged, but if there is no
relaxing of restrictions, there is no other way," said a source
with knowledge of the situation.
The Ministry of Mines and Energy said on Friday that it has
sought to expand the supply of energy in Brazil, but ruled out
carrying out an emergency process for hiring new capacity.
"The current situation is challenging," it said in a
statement, citing lower than usual reservoirs.
"There is no provision for emergency energy contracting," it
Drier-than-normal weather has hurt production of sugar and
coffee in Brazil, the world's largest supplier of those
products, pushing up futures prices for the commodities.
Coffee futures touched a 4-1/2 year high on Friday with
traders worried that critical soil moisture in Minas Gerais
could affect the 2022 coffee crop as well.
The Mines and Energy Ministry said dry conditions will
persist in coming months, particularly in the Southeast and
Center West regions.
(Reporting by Roberto Samora, Ana Mano in São Paulo; Additional
reporting by Marcelo Teixeira in New York and Rodrigo Viga
Gaier; Editing by Richard Chang and Grant McCool)