Power grid generates a million jobs in a former Brazilian wasteland

Here in the harsh backlands of Brazil's northeast, one of the region's hardiest pioneers, Delmiro Gouveia, set up a 1,000-kilowatt power plant in 1913.

Using the waters of the rusing, oft-turbulent Sao Francisco River that cuts a meandering swath through much of the desertlike wasteland of the northeast, the plant generated power to run the machines of Gouveia's nearby textile mill.

Gouveia was ahead of his times, anticipating what modern-day Brazilians have done in harnessing the Sao Francisco and supplying electric power for much of the northeast. The important cities of Recife and Salvador, both of them bustling with new industrial activity, rely on electricity generated by a complex of sophisticated dams on the Sao Francisco here.

Without this power, the industrial surge of the northeast during the past 15 years would not have taken place.

More than any other factor, the complex of dams, power-generating stations, and related facilities on the Sao Francisco is responsible for the improved economic prospects of this extremely poor region of Brazil.

For centuries, the river ran its course through some of the most desolate regions of Brazil without being used for anything except transport. Now its harnessing has fueled the growing industry in the northeast and in the process helped to bring an estimated 1 million jobs to the area in the past 15 years.

Producing more than 3.5 million kilowatts, the project has markedly altered the economic patterns of this traditionally poor region of Brazil, and there has been hope that a planned-and fully integrated 10 million-kilowatt complex would solve this region's power needs until the year 2000.

The northeast, nevertheless, is still power-short -- and the region is still one of Brazil's impoverished areas.

But most observers here and in the cities of Recife and Salvador, which benefit so bountifully from the hydroelectric facilities on the Sao Francisco, largest in Brazil to date, are quick to suggest that without the whole complex, life in this part of Brazil would be much more difficult and that the region would not offer the hope for economic growth that now exists.

"It would be almost impossible for the northeast to be a livable area," says Jose Antonio Feijo de Melo, an executive of the state-owned power facility that runs the complex, "if it were not for Paulo Afonso [as the whole complex is generally known]."

There are four dams and hydroelectric generating facilities here at Paulo Afonso city, with another large one at nearby Moxoto. There is also a another project at Sobradinho, 150 miles up the river, where a huge artificial lake has been created on the Sao Francisco.

Other facilities are on the drawing boards, "but right now we don't have enough money for the expansion," comments Luiz Carlos Menezes, who is president of the Companhia Hidro Eletrica do Sao Francisco, known generally in the area as CHESF.

"Yet what we have here is a real start for the future of this region of Brazil."

Mr. Melo adds that "Paulo Afonso has kept growing as the northeast developed, and the northeast has developed with the expansion of Paulo Afonso." Now, however, the future is somewhat cloudy, as the government of Brazil puts limits on the growth of the whole complex in response to its own financial limitations.

Throughout its development, the Paulo Afonso complex has been paid for by a combination of Brazilian government financing and loans from international organizations such as the Inter-American Development Bank (IADB). The total cost to date is roughly $1.2 billion, of which half has come from international sources -- both banks like the IADB and private foreign banks.

Other priorities in a time of increasingly tight money in Brazil are now dictating a slowdown in expansion plans at the Paulo Afonso project. Several of the plans on the drawing boards are, for the time being at least, remaining there. More important, the huge project at Itaparica -- designed to be as large as Paulo Afonso I, II, III, and IV and Moxoto combined -- has been stopped in mid-construction because of a lack of funds.

Without efforts to continue the expansion, however, the northeast could face a power shortage by the end of this decade, since the region as a whole is continuing to expand industrially and to consume an increasing amount of generated power.

"Our mission in the Northeast," Mr. Menezes says, "is to stay ahead of the energy needs of the area."

Sources in Brasilia, the capital, understand the problem. But additional domestic funding for Paulo Afonso's expansion is unlikely. If construction of new facilities, including transmission lines to carry power, is to continue, the money will simply have to come from international sources, they say.

That is why CHESF people are looking at the prospect of new loans from organizations like the IADB.

The bank has played an instrumental role in the whole complex almost from the very start. Its first loan was in 1962 to help construct Paulo Afonso II, and the bank has over the years provided close to $100 million in loans. CHESF officials like Mr. Melo have very kind words for the bank.

"Without the bank much of this would have been impossible," he says, "for it was not only the bank's funding, but its influence in generating other loans, that was important."

Moreover, the bank has contributed a great deal in technical expertise, although bank officials in Brazil also speak highly of the skills of the Brazilian engineers.

Mr. Menezes, who like Mr. Melo is an engineer, has little doubt that Brazilian engineers and workmen can handle whatever expansion of the Paulo Afonso complex is contemplated. Again and again he comes back to the concern of continuing the expansion of the facility. "The only thing that bothers me is the ability to get money," he adds. " We need it to keep up the rhythm of development."