Drought in Uruguay affects costs of electricity and generation

The Executive Branch of Uruguay authorized the public electricity company to borrow up to 70 million dollars so as to deal with the imports prompted by the persistent drought.

The credit line may be used for a period of up to 24 months in the event of financing needs, and to meet the company’s commitments during 2023 and 2024.

The board of the National Administration of Electric Power Plants and Transmissions (UTE) stated that “both the weather situation and the instability in the price of oil are the factors that generate uncertainty in the forecast of the flows of funds.”

The financial needs are associated with supply costs originated on the demand for thermal generation fuel and the increase in prices in the international market.

Due to the heatwave, hydraulic power generation, important component of Uruguay’s electrical matrix, has decreased this year. The four UTE dams contributed just 15 percent of the total generation from January to date.

The lower production of hydraulic energy caused the costs to increase at the beginning of the year. In January the UTE disbursed around 60 million in diesel and fuel oil for its thermal power plants.

To reduce losses, UTE imported energy from Brazil at more convenient prices than the cost of operating its thermoelectric plants. In February Uruguay imported 25 percent of its electricity demand.

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