Round Table Comparative Analysis of Industrial Policy Worldwide Moscow, April 27, 2004
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Transcript of Round Table Comparative Analysis of Industrial Policy Worldwide Moscow, April 27, 2004
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Designing effective national incentive and subsidy schemes in industrial policy
(energy and water)
Jerson KelmanBrazil
Round Table Comparative Analysis of Industrial Policy Worldwide
Moscow, April 27, 2004
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Brazil
Population(millions)
180
Territory(millions km2)
8.5
Per capita income(US$/year)
2,700
(?)
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Key Considerations of Russia’s New
Industrial Policy
27. The strategy of minimal state interference in industrial policy has exhausted itself…
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Key Considerations of Russia’s New
Industrial Policy
9. …An industrial policy cannot be tantamount to giving away of state budget resources.
12. The first priority would be supporting of exports … The mechanism for doing this entails state guarantees of up to 25 percent of from investments for creating such production project…
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Key Considerations of Russia’s New
Industrial Policy
State guarantees
Case 1: Brazilian Electric Power Industry
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Country Wide Integrated Electric
System
Installed Capacity = 73,000 MW
96 Hydropower plants > 30 MW
57 Regulating reservoirs
Country is interconnected by
70,000 km of high-voltage lines
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Reservoirs and power plants in cascade
TRÊS MARIASV = 19 billion m³396 MW SOBRADINHO
V = 34 billion m³1,050 MW
ITAPARICAV = 10 billion m³1,500 MW
PAULO AFONSO IV2460 MW
XINGO3000 MW
MOXOTÓ440 MW
PAULO AFONSOI - 180 MWII - 480 MWIII - 864 MW
95% Hydro
Centralized
dispatch
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The Liberal Power Sector Reform of 1996 (which failed…)
Rationale:
– To promote economical efficiency
Guidelines:
– Private investment and competition in energy generation and retailing
– Transmission and distribution to remain regulated, with provisions for open access
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SOUTH-SE SystemEnergy Wholesale Market Prices (US$ / MWh)
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THE ENERGY CRISIS OF 2001(load curtailment of 20%)
There was a market failure
• Government restored centralized expansion planning for new plants and transmission lines
• Owner of a new hydroelectric plant now gets, before construction, a long term contract with a pool of distribution companies (equivalent to an annual “rent”)
• All power plants operate according to rules set by central dispatch
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Key Considerations of Russia’s New
Industrial Policy
15. Support of industrial infrastructure development needed by business.
16. The purchase area for industrial
development needs the following:…..- tougher control should be exercised over
investment activities of the “natural” monopolies…
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Key Considerations of Russia’s New
Industrial Policy State control should be exercised on processes or on results?
Case 2: Subsidizing sewage treatment plants for cities
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SEWERAGEResidential Service Coverage
56 % Urban areas
3 % Rural areas
47 % Brazil
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River Pollution Water Rationing
TIETÊ RIVER IN SÃO PAULO
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CANTAREIRASYSTEM
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CANTAREIRA SYSTEM
Is responsible for the water supply to approximately 10 million inhabitants of the Greater São Paulo Area.
Guaraú Water Treatment Plant
Nominal Treatment Capacity: 33 m3/s
Water inflow at the entrance of Guaraú Plant – Cantareira System
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Basic Assumptions and Objectives:
Government does not pay for civil works or equipment. It pays for results.
Government does not pay service provider before the plant is in full operation.
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Terms of the contract between Government and service provider Government subsidy is 50% of the total
estimatedestimated capital cost of the plant, according to a Reference Value Table
Payments are made quarterly on fixed amounts for a period varying from 5 to 7 years, provided sewage is treated according to quality standard set in contract
Government makes a bank deposit in favor of the service provider equivalent to present value of the cash flow
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Case 3: Integrated management of natural resources taking into account interests of multiple sectors of economy
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Water allocation among sectors
Navigation
HydroelectricityUrban supply
Industrial supply
Tourism Fishing
Flood Control
Irrigation
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Reservoirs and power plants in the São Francisco River
TRÊS MARIASV = 19 billion m³396 MW SOBRADINHO
V = 34 billion m³1,050 MW
ITAPARICAV = 10 billion m³1,500 MW
PAULO AFONSO IV2460 MW
XINGO3000 MW
MOXOTÓ440 MW
PAULO AFONSOI - 180 MWII - 480 MWIII - 864 MW
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Loss of firm energy for each m3/s used for irrigation
2,79 MWmed
2,54 MWmed
2,08 MWmed
1,06 MWmed
0 MWmed
3,22 MWmed
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SOLUTION..... River Basin Committee
Water Rights Enforcement Polluter pays
Water Resources Management