Brazil rules out capital injection for Eletrobras-report
* Zimmermann rules out extending aid to Eletrobras
* Tells Valor company agreed to new license terms
* Comes as shares sink to lowest since July 1994
SAO PAULO, Nov 23 (Reuters) - Brazil's government ruled out injecting fresh capital into Centrais Elétricas Brasileiras SA after shares in the nation's largest power holding utility fell this week to their lowest level in more than 18 years, a local newspaper reported on Friday, citing a senior official.
Neither the drop in shares of Eletrobras, as the company is known, nor an expected tumble in revenue expected for next year hindered the company's finances, Valor Econômico said, citing Marcio Zimmermann, the No. 2 official at Brazil's Mines and Energy Ministry.
Eletrobras' most widelytraded class of shares lost a fifth of their value on Wednesday, their biggest one-day decline, on expectation that a hydro dam concession renewal plan and related power-rate cuts will slash revenue, profit and investment for the years to come. Shares in the Rio de Janeiro-based company have fallen for 11 of the past 12 sessions.
"The National Treasury will not pour in any money. Eletrobras won't turn into a dependent company," Zimmermann told Valor. "What it will do is look out for good business opportunities and, with that, investors will be lured."
Zimmermann's remarks underscore the risks facing Eletrobras as a result of President Dilma Rousseff's plan to slash electric rates by more than 20 percent, an initiative meant to boost economic growth. The plan is likely to spark a 30 percent drop in revenue at Eletrobras next year, Barclays analysts led by Francisco Navarrete recently said in a client note.
A spokesman for the ministry in Brasilia did not have an immediate confirmation of Zimmermann's comments to Valor.
Eletrobras fell 6.9 percent on Thursday. The stock is down 60 percent since Rousseff announced the plan late in August.
In the interview with Valor, Zimmermann denied allegations that the federal government, Eletrobras' controlling shareholder, forced Eletrobras to immediately renew hydroelectric dam and power transmission concessions expiring between 2015 and 2017 in exchange for lower power rates, Valor said. Shareholders will meet on Dec. 3 to decide on the matter.
"Eletrobras evaluated the situation and elaborated a study that was presented to the board," Zimmermann added. "The analysis showed that, considered the net present value of expected revenues, there were benefits if the company renewed its licenses now."
Other power companies with concessions expiring between 2015 and 2017 have threatened not to accept the government's terms and say they will continue to charge higher prices in the near term, making it harder for the government to fulfill its promise of cheaper electricity starting next year.
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