Brazil to renew energy contracts by decree-report

SAO PAULO Jan 29 (Reuters) - Brazil's government plans to renew concessions for electric utilities by presidential decree, in a bid to reduce regulatory uncertainty that has damped investments and mergers in the sector, Folha de S.Paulo newspaper reported on Friday, citing a draft of the proposal.

The decision means the government has abandoned plans to take back the concessions, which end between 2015 and 2020, and auction them again, Folha said.

Officials at Brazil's Aneel utility regulator have argued that electric utilities face difficulty in raising funds from banks to invest in transmission lines or secure long-term energy sales and purchase contracts because of doubts on the concession renewal, the daily said.

Under the plan, energy generators would have their contracts renewed, but would have to agree to lower electricity tariffs, Folha said. The rules for companies in energy transmission and distribution wouldn't be changed, the daily said.

A portion of electricity tariffs in Brazil goes directly to generators to make up for investments in power plants, but since the majority of those plants were built several years ago, companies wouldn't need the funds, Folha said.

The decision to renew the concessions by decree may benefit particularly three state-run utilities that ran the risk of having a majority of their assets returned to the federal government, the daily reported.

An official at the presidential palace had no immediate comment.

Sao Paulo state-run energy generator Cesp (CESP6.SA) has four power plants with concessions ending in 2015, Folha said, while Cemig (CMIG4.SA)(CIG.N), the combined utility controlled by Minas Gerais state, has 19 plants with concessions coming due in 2020. Parana-state run Copel (CPLE6.SA)(ELP.N) also has the concession for seven power plants ending in 2019. (Reporting by Elzio Barreto; Editing by Jon Loades-Carter)