Observers have been warning for some time that Brazil faces electricity shortages as early as this year. Rationing is among the government’s worst nightmares. The previous administration was booted out by the electorate in 2002 largely because that year’s rationing – a result of low rainfall and bad management – branded it as the ”blackout government”.

This government insists that rationing is not a threat. The industry thinks otherwise. Rowe Michels and colleagues at Bear Stearns in New York recently issued a report showing that ”a perfect storm of four worst-case scenarios” could force the government to ration supplies as early as May this year. Conspiring together are shortages of natural gas, especially from Bolivia; a faster-than-expected rate of growth in demand; unusually low rainfall since the rainy season failed to get underway in November; and delays in delivering new generating capacity.