* CEO sees need for long-term visibility for investors
* Rate cuts on renewed licenses has shaken up industry plans
* Executive says no guarantee on January start for Jirau dam
SAO PAULO, Oct 16 Brazil needs to lay out clear
rules on renewing future electric utility licenses, the chief
executive of GDF Suez said on Tuesday, after the
government stunned the sector in September by slashing rates
some companies could charge consumers.
Last month, Brazilian electric companies lost as much as a
quarter of their market value in a day as President Dilma
Rousseff unveiled the plan to lower some of the world's highest
energy bills. Analysts said the shakeup would lower costs for
some industrial companies but hammer profitability of the
"Brazil's government has to set clear rules in the future
with long-term visibility for investors," Chief Executive Gerard
Mestrallet told reporters in Sao Paulo.
Lower electric rates may also spur more energy use,
increasing the demand for new generation capacity and the need
to attract investment in the industry, said Mauricio Bahr, the
company's top executive in Brazil.
A senior regional analyst for Fitch Ratings warned in an
interview last month that Brazil's aggressive plans for the
energy industry may sap appetite for concessions in that sector
GDF's own generation contracts were not affected by the
current renegotiations, in which the government is focusing on
licenses that expire from 2015 to 2017.
Mestrallet was in Brazil to inaugurate the Estreito
hydroelectric dam in the north-eastern state of Maranhao, a
1,087 megawatt power plant, in which GDF holds a 40 percent
stake. The dam will generate enough energy to power the homes of
4 million Brazilians, Mestrallet said.
Bahr said the company also aims to start generation at
Brazil's Jirau hydroelectric dam in the first quarter of 2013,
adding that the prior January launch date was "not guaranteed."
Work at Jirau, in which GDF recently raised its stake to 60
percent, has been held up by labor protests and environmental
red tape, like many major hydro dams in Brazil, which raises
costs and reduced the return on investment.
The dam on the Madeira River, one of the Amazon's main
tributaries, will have a generation capacity of 3,750 megawatts,
making it the second-largest electric generation project
underway in Brazil.
(Reporting by Brad Haynes; Editing by David Gregorio)