A plan by BNDES, Brazil's state development bank, and a pool of commercial banks to lend an additional 6.5 billion reais ($2.9 billion) in emergency credit should help electricity distributors cope with higher power costs amid a drought, the president of industry watchdog Aneel said on Tuesday.

Reuters reported on Monday that BNDES, the main source of long-term corporate credit in Brazil, would disburse 3 billion reais to the CCEE, the country's spot market electricity clearinghouse, with the rest coming from a group of 15 banks.

New financing for Brazil's ailing power companies comes as cash from a 11.2 billion real credit in April ran out recently. The loan would go to the CCEE, a privately held entity in charge of buying and selling electricity in the spot market. It would subsequently funnel money into the coffers of Brazilian power distributors, said Aneel president Romeu Rufino.

The loan should "in principle" be enough to help distribution companies pay higher power costs in the spot market, Rufino told reporters in Brasilia. He noted that, unless the companies have money to settle their power purchase bills by July 31, CCEE would be forced to delay settling the bills, he added.

Brazil's electricity sector is grappling with soaring spot power costs amid the driest start of a year in decades and the government's reluctance to hike rates before the October presidential election.

A drought has reduced power available from hydroelectric dams, which is normally responsible for about 70 percent of the country's electricity, against a backdrop of rising demand. Distributors have been forced to buy spot market power, much of it generated by expensive natural gas or fuel oil, to meet demand.

The group of banks that participated in the prior deal included Banco Bradesco SA ; Itaú Unibanco Holding SA ; Banco Santander Brasil SA ; Grupo BTG Pactual SA ; Citigroup Inc ; JPMorgan Chase & Co ; Credit Suisse Group AG ; Bank of America Corp and state-run lenders Banco do Brasil SA and Caixa Econômica Federal SA.

It was not immediately known which banks would be in the new pool.

Rufino said terms of the new loan would be identical to the one extended in April. Under conditions of the April transaction, banks pegged the debt to receivables linked to utility bills, with repayment scheduled to begin as early as next year. ($1 = 2.23 Brazilian reais) (Reporting by Leonardo Goy; Writing by Guillermo Parra-Bernal; Editing by Jeffrey Benkoe)