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Country needs to correct business models in the energy sector Power and Energy

07 Jan 2019| Posted by Morris | In Power and Energy

Great works of energy and infrastructure are essential for economic development, but must be studied, planned, designed and built with extreme competence, combining joint efforts of the public and private sectors. History also points to some lessons that go beyond the purely technical approach of what should be done and, likewise, what should be avoided. Public works brought enrichment opportunities for many people in governments and their suppliers. Below is an episode narrative that will awaken in the Brazilian reader the feeling of familiarity with the theme. A famous builder, then acclaimed for his splendid work on a previous project, announced the intention to start a new and massive civil works infrastructure. Good fame preceded him, and investors were willing to support him. Excessively confident in his professional success, the builder neglected the in-depth study of the geographic and climatic characteristics of the place where the work was done and developed a flawed project. After the promising start, it was characterized the impossibility of carrying out the project as thought because of the incorrect mapping of the terrain. The eight months of rain a year completely changed the health of the place with epidemics of yellow fever, malaria and other diseases. Many have lost their lives there. The inevitable change of the project resulted in a large increase in the budget, for which government bailout to the construction company has become increasingly large. The combined impact of such difficulties led to bankruptcy. Having verified the omission of important information to small investors who lost everything and, still, the government support for the project, about 510 deputies and many ministers involved in the process (including a famous minister, nationally speaking politician) became suspicious. all accused of receiving tips and favors, either by the hands of the famous builder or, also, by his son. The political-financial scandal exploded and led to the suicide of the director of the construction company, responsible for the interface with government and investors. Before he left his life, he left an extensive list of politicians, deputies and ministers implicated in undue advantages in the hands of a tabloid journalist. Overnight the newspaper became one of the most popular and influential in the country. The list was being published little by little creating a suspense in every society, which saw the reputation of its political representatives fall continuously. Hundreds of deputies lived the fear of reading their respective names as corrupt in the dreaded headlines the next day. In the end, 104 deputies were found guilty. One of the ministers spent three years in solitary confinement. As current as it may seem, the narrated situation refers to the construction of the Panama Canal and episodes in France around 1890. In addition to the pernicious picture of corruption, we see the dangers of lack of studies and good engineering projects. The inappropriateness of government involvement in matters that best fit the private sector is clear. We also note the vulnerability of formidable leaders when exposed to complex situations in an environment of lack of governance. The builder is Ferdinand Lesseps, who previously led successfully the construction of the Suez Canal. The engineer is Gustave Eiffel, the greatest calculator of metallic bridges and towers including the one that bears his name in Paris. The famous minister is George Clemenceau, hero of France; and the director is Baron Jacques de Reinach. After the bankruptcy, the work was resumed in 1904 by an American company and finally inaugurated in 1914. In our day, where the motto is the realization of energy works by private companies, it is never too much to remember the importance of: A strong, honest State and competent, committed to environmental, economic and social sustainability, investing in studies and engineering to appoint and design the right works that result in the implantation and future operation of economic and insurance enterprises; Regulatory agencies that oversee the operation of projects throughout their lives, ensuring good management and preventing abuses of economic power; Primorous governance that blends from the deleterious political influences the works and projects; Private companies that supply goods and services that, in addition to the technical field, purchase the requirements of compliance. Solid financial equation with hiring of execution insurance that ensures the good speed of implantation and the safety of the operation of the work throughout its life cycle. Brazil will require significant new investments in energy and can not expect them to be well executed and fulfill their role if they repeat the same business models that have presented so many failures in recent years. The Brazilian electricity sector has suffered the degradation of its planning

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