LACGEC 2000

This paper presents a framework to identify, analyze and select a company most suitable strategic positioning alternatives in power generation and trading in the Mercosur countries. Special emphasis is given to risk assessment in the search for a solid positioning. Initially we describe the power and gas systems in the largest Mercosur countries, specifically those from Brazil and Argentina. We analyze demand in the major consumption points of the region and its probable future evolution. We analyze as well the nature of the different supply sources for power generation and the current plans for its expansion, including the transportation infrastructure and its major expansion plans. We also study the natural gas availability in different Mercosur areas, as well as its probable evolution. We then describe the institutional and regulatory environment of the different countries and discuss probable scenarios for its future developments. Moreover we consider macroeconomic aspects of each sub region and its influence in the evolution of the power sector. In this context we discuss the studies and analyses that should be done for a specific company that has the intention to participate in the power generation and/or trading markets in the region within its specific conditions such as financing availability, cost of capital, existing capabilities and positional assets and that is willing to take a certain risk level in businesses within this sector.