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. Last Updated: 07/27/2016

Energomash Plans Brazilian Comeback

RIO DE JANEIRO, Brazil ? An acute electricity shortage in Brazil is feeding the ambitions of Russian power firms to make a comeback to Latin America's largest country after their walkout caused by the breakup of the Soviet Union.

After winning a project last year to boost capacity at the Sobradinho hydroelectric plant in northeastern Brazil, Energomash Power Machines Concern now wants to sell its new

gas-fired generation technologies in Brazil.

Valery Orlov, Energomash's South America director, said during an energy conference in Rio de Janeiro that a delegation from Brazil's state-run power giant Petrobras had recently visited Moscow for talks.

He would not reveal any details of the negotiations, but said he was hoping for a deal with Petrobras, which is a key part of the government's emergency program to build new gas-fired plants and avert new power crises in the future.

Energomash is no newcomer to the region or to Brazil. Neighboring Argentina, Latin America's No. 3 economy, relies on Russian equipment for up to one-quarter of its overall electricity capacity.

In the 1970s, the then state-run company equipped the Brazilian Sobradinho plant with six 178 megawatt hydroelectric turbines and sold four 163 megawatt turbines for the Capivara plant, run by Cesp power utility of the Sao Paulo state.

"All this equipment is working perfectly, we have not received any complaints so far," said Orlov. "In Russia, our industry is getting up on its feet again, we have big capacities and we need big contracts. ? Unfortunately, we had to leave Brazil during perestroika, but now we want to be back."

Despite quitting Brazil for most of the 1990s, the company has been actively working in Mexico, Colombia and Argentina.

Orlov said that Russian gas turbines or equipment and turbines for combined gas-steam cycle plants could find good demand amid Brazil's power crisis, but added that the government still had to do its best to provide incentives for such projects.

"Power plant projects cost around $1 billion, and we have to do it in a consortium. But in the present conditions in Brazil, these are risky projects, and it's hard to find investors," he said, adding that Energomashexport's financing arm could offer long-term financing for parts of some projects.

Orlov, as well as other energy officials, says that Brazil has to install some 4,000 megawatts in new

capacity every year in order to avoid extending the energy crisis and keep its economy running and growing into the future.

That means the government will have to do whatever possible to attract investment in the sector, which should eventually lead to the liberalization of electricity prices, now being fixed by the government, officials say.

Brazil's dependence on hydroelectric plants and an acute drought have caused this year's difficult energy crisis, which has forced the government to impose tough power rationing in the country, stymieing economic growth.