Executive summary The Brazilian energy industry is at crossroads. Decades of planned control by the government have resulted in market inefficiencies. Firms that are dominant in the industry rely on non-innovative approaches to deliver low-cost electricity to consumers. However, the power tariffs in Brazil are among the highest in the world, causing the government to make additional policy interventions, such as putting price ceilings. According to the economic predictions of the effects of a price ceiling, the policy has only served to cut production because it makes businesses less profitable. At the same time, the Brazilian electricity industry structure has two segments. The government controls about 70 percent of the market with companies bidding for long-term contracts, while the other 30 percent is a pure market with no barriers to entry and market equilibrium pricing strategies. The government-controlled market is an oligopoly, but companies awarded long-term contracts also enjoy some monopolistic powers. Overall, the Brazilian electricity industry is not globally competitive, and it has been a hindrance to the economic performance of the country. Overreliance on hydroelectric power exposes the company to erratic weather patterns. This report also evaluates the business strategies of Electrobras. The discussion reveals that the company is waking up to the fact that government protectionist measures are dwindling in favour of market-based forces. Therefore, Electrobras is looking for expansion and has continued to make internal reforms to improve its overall operation’s efficiency. Introduction Brazil is the tenth largest energy consumer in the world. It takes the number one position in South America and has a regulated energy industry where the government plays a significant role. However, the industry is an oligopoly, with only a few players dominating the market. The structure is shaped by the transition from government only policies to market-based policies that rely on forces of demand and supply, as well as rational economic ideologies on resource allocation. The oligopoly situation is promoted by the dominant nature of two companies, which also happen to be state-owned. They are Petrobas and Electrobras. The Brazilian economy witnessed rapid growth in the 90s and 2000s decade because of various economic reforms implemented by successive governments. The power sector in the country got a new regulatory framework in 2004 and has since increased its overall electricity generation capacity (IRENA 2011). By 2013, the installed capacity of electricity in Brazil was 127,000 megawatts, with hydroelectric power contributing 86,000 MW, while fossil fuel contributed 37 MW (Saraiva 2012). Analysis of the structure of the industry The new structure of the industry is hybrid, which came after the 2004 electricity sector reforms. On one hand, there is a regulated sector where the state influences investments, pricing, and consumptions, while there are producers and consumers relying on the market to deliver and obtain electricity, on the other hand. New public and private companies can come up with power generation and distribution projects under the