Who am I Erico Cardoso Professor at Fundacao

Who am I? Erico Cardoso Professor at Fundacao Getulio Vargas – Business College Professor at Universidade Federal Fluminense – Business College Master Degree in Administration at IBMEC – Concentration Area: Finance and Stock Market Specialization in Financial Market – ANDIMA/IERJ – 2002 MBA in Management and Corporate Finance – Fundação Getulio Vargas – 2001 Posgraduation in Financial Administration – Fundação Getulio Vargas – 1999 Undergraduation in Business Administration - Universidade Federal Fluminense - 1999 Jorge Kreimer Professor at Fundacao Getulio Vargas MBA in Corporate Finance – Fundação Getulio Vargas – 2006 Undergraduation in Business Administration - Bennett - 2001 2

AGENDA ØReasons for Investment ØDifficulties ØSolutions ØProgram Luz para Todos – Energy for all program 3

Reasons For Investment Imagine yourself. . . Without comunication for speaking with somebody you love; Without energy for study or work; Without TV or Internet to see landscapes, others countries; Without radio to hear your favourite song; Without fuel to heat up your food. . . There are 1. 7 billion people in the world that lives in this way. 4

Reasons For Investment Access of the fds World Electricity 5

Reasons For Investment A quarter of the World’s People (1. 7 billion) don’t have eletricity in their houses and 2. 0 billion use the traditional fuels coming from biomass. Those people spend more money using ineficient energy than they would spend if they had eletric power in home It is important to allow more people to attain higher standard of living. (Reduction of poverty). Reduction of the indoor air pollution from burning tradicional fuels (major factor of the causes of respiratory illness that it kills almost 2 million children under the age of five year. It kills more than AIDS, Malaria and Tuberculosis. 6

Reasons For Investment It allows the change of the productive time spent by the women and children collecting firewood and biomass. They can study or work. Social impacts: Create jobs and raise incomes, transfer skills and build local capacity, transfer a share of fiscal revenues and increase the investment in social infrastructure. It increases income from the poor people. It is more expensive to buy several candles than pay monthly fee for energy services. 7

Reasons For Investment Strong correlation between the devolpment of a country and its consumption of energy: 8

Reasons For Investment Planet Earth 9

Difficulties The price of installing a transmission line is very high in rural areas. The private sector doesn’t fell attracted for investment in social reasons. The ROI (Return on Investment) is better in urban areas than in rural areas. Poor people use not be a former opinion. The maintenance of the project is expensive. 10

Solutions ESCO (Energy Service Companies) can reduce the cost of electricity in rural areas. "ESCO's - Companies of Services of Energy's Conservation - they are deprived companies that have as objective accomplishes businesses in the extent of the reduction of costs and consumption of energy and usefulness used in the compounds industrial, commercial, of services, among other users of energy, without affecting the quality and amount of the product or offered service. " (ABESCO, 2004). 11

Solutions ØIt develops, elaborates the form and finances projects of energy efficiency. ØIt installs and maintains the efficiency of the equipment of energy efficiency involved. ØIt measures, monitors and verifies the economy of the project of energy. ØIt assumes the risk that the project will save the amount of energy guaranteed. 12

Solutions THE ENERGY FOR ALL PROGRAM (O PROGRAMA LUZ PARA TODOS) Universalization of the Access and Use of the Electric Power Generation of Socioeconomic Benefits 13

“LUZ PARA TODOS” THE ENERGY FOR ALL PROGRAM * Creation and development in 2003 * Actions since 2004 Parternerships PNUD, World Bank, USAID, NGO’s Adhesion in 2003 to GVEP (Global Village Energy Partnership) 14

“LUZ PARA TODOS” THE ENERGY FOR ALL PROGRAM MAIN IDEAS AND GOALS 1 -Reduction of poverty and hunger using the energy as a development vector 2 -Social Inclusion, Maintainable Growth and Quality of Life 3 -Energy acccess to 12 million people (most of them in the rural areas) until the year of 2008 15

“LUZ PARA TODOS” THE ENERGY FOR ALL PROGRAM Coordinated by the Ministry of Mines and Energy and executed by Eletrobras Other Participants: - STATES - EXECUTIVE AGENTS (Dealers of Electric Power and Cooperatives of Rural Eletrification) - MINISTRIES - ANEEL (Federal Agency that rules the Energy market) - NATIONAL AND STATES’ COMISSION AND COMITTEES. 16

“LUZ PARA TODOS” THE ENERGY FOR ALL PROGRAM Technological Options Program use three alternative actions, that compose the service to the demands of each area: 1 – Network's Extension 2 – System of Generation Decentralized with Isolated Networks 3 – Individual Systems of Generation 17

“LUZ PARA TODOS” THE ENERGY FOR ALL PROGRAM Eletrobrás Mixed Economy Company - Controlled by the Federal Govermment - Shares negociated in the Stocks Exchange (Brazil, USA, Spain) Holdind of the Eletrobrás Group Eletrobrás Controls: FURNAS - CHESF – CGTEE ELETRONORTE - ELETROSUL ELETRONUCLEAR 18

“LUZ PARA TODOS” THE ENERGY FOR ALL PROGRAM Process of Implementation Eletrobras - multiple functions - To sign the “Term of Commitment” among the Federal Government, States and the Executive Agents after analyzing the “Program of Works” presented by the Executive Agents, as well as directing it to Ministry of Mines and Energy (MME) - Liberation of financial resources after contract signature and to prove the appropriate use of the resources, besides inspecting the works physically. Eletrobrás elaborates and it sends, monthly or when requested, reports seeking to provide the program partners on information regarding the works and financial resources - Administration of the program main financial resources (the “sectorial funds” RGR and CDE) 19

Achievements NUMBERS REACHED IN CONNECTIONS ACCOMPLISHED IN THE BRAZILIAN HOMES Brasil 698. 963 source: Eletrobrás - updated in 20 01/12/2006

Achievements NUMBERS REACHED IN CONNECTIONS + CONTRACTS Total Contracts Connections Total Brazil 1, 109, 774 698, 963 source: Eletrobrás - updated in 01/12/2006 21

Achievements PHYSICAL POSITION OF GEOGRAPHICAL CONNECTIONS source: Ministry of Mines and Energy - updated GEOGRAPHICAL AREAS ACCUMULATED CONNECTIONS in 27/12/2006 CONNECTIONS IN PROCESS PEOPLE BENEFITED WITH ACCOMPLISHED CONNECTIONS PEOPLE TO BE BENEFITED WITH WORKS IN PROCESS NORTH 28. 906 632. 435 144. 530 NORTHEAST 478. 660 53. 294 2. 393. 300 266. 470 SOUTHEAST 236. 326 62. 275 1. 181. 630 311. 375 SOUTH 79. 841 11. 564 399. 205 57. 820 MIDDLE-WEST 70. 222 3. 786 351. 110 18. 930 TOTAL 126. 487 991. 536 159. 825 4. 957. 680 799. 125 22

Achievements In the beggining of 2007 ENERGY FOR ALL “Luz Para Todos” has reached More than 5. 000 people ! 23

The End Contacts: Erico Cardoso E-mail: ericosc@ajato. com. br Contacts: Jorge Kreimer E-mail: jorgekreimer@uol. com. br 24