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Latin American Power 2008 Outlook: Region Struggles With High Energy Prices

Posted on: Tuesday, 8 January 2008, 15:00 CST

Today, Fitch issued its 2008 Latin American Power Outlook. The special report highlights the region's struggle to cope with high hydrocarbon prices and insufficient natural gas supply as many countries try to meet strong electric energy demand growth. This year could continue to be challenging for energy generation companies that strive to maintain energy supplies with increasing energy demand across the region.

'Many countries throughout the region are grappling with tight electric reserve margins and high spot prices', said Gianna Bern, Senior Director in Fitch's Latin America Corporates Group. 'In many cases, the strength of regulatory regimes is being tested as governments try to keep end user prices down, yet still encourage investment. The winter of 2008 could be challenging in the Southern Cone.'

Energy self sufficiency is the name of the game as reliable energy from neighboring countries is non-existent at best. Recent policies in some markets have helped push forward energy projects to diversify the countries' energy mix, which should stave off near- and medium-term electricity shortages.

The report provides snapshots of the electricity sector in certain countries such as Argentina, Brazil, Chile and Colombia. Argentina is expected to continue facing difficulties meeting its natural gas export obligations during 2008. Brazil is planning to meet its strong demand growth using its abundant but untapped hydro resources. Chile is aiming towards energy self sufficiency after Argentine gas curtailing left the country exposed to significantly higher cost fuel supply alternatives.

The full report 'Latin American Power 2008' can be accessed on the Fitch Ratings web site www.fitchratings.com.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

Source: Business Wire

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