* Natural gas cut still in planning stage, ministry says
* Petrobras will be used to ensure price cuts -Pimentel
* Low U.S. shale gas price pushing program - Mantega
RIO DE JANEIRO, Dec 12 Brazil plans to cut the
cost of domestic natural gas as it widens a campaign to force
utilities and energy companies to slash power prices, Brazil's
finance ministry said on Tuesday.
The plan, flagged by Finance Minister Guido Mantega during
comments in Paris, is still being developed, but will require
reductions in the price of gas by state-run energy company
Petrobras, government officials said.
The effort is part of a broader government initiative to
lower some of the world's highest energy costs and make Brazil's
economy more efficient.
"We have to find a solution," Mantega said in Paris,
according to a report the Agencia Folha news agency. "We don't
have a solution for this, but we have to reduce the cost of gas
any way we can."
Mantega said the need to take action grew more urgent
because of a drop in world gas prices caused by abundant new
U.S. shale-gas output.
Most recently, the government overhauled the rates charged
by Brazil's electricity companies. The effort, though, caused a
plunge in utility share prices and raised concern that the
government will undermine the industry's ability to invest in
To achieve its goal in gas, the government will force
Petrobras, the near monopoly provider of the fuel, to take
measures to ensure the cuts happen, Development Minister
Fernando Pimentel said.
"This will require action from Petrobras," Pimentel said,
according to Agencia Folha. "It will be done."
Pimentel declined to say what those actions will be, though
Petrobras has kept supply for industrial users tight and prices
high in recent years to ensure a supply of gas for thermal power
The government already forces Petrobras to keep gasoline and
diesel prices below world market levels, a decision that caused
the company's refining and supply unit to lose more than $8
billion this year and led to its first loss in 13 years in the
The gas-fired power plants, most of which Petrobras also
operates, are needed to complement Brazil's hydrodams, which
supply more than 3/4 of Brazil's electricity and must
occasionally stop or slow operations to recharge their water
While Brazil produced a record 72 million cubic meters of
natural gas a day in October, a lack of pipelines and other
infrastructure and barriers to entry from companies besides
Petrobras has reduced competition.
Efforts to force the price cuts have come at the expense of
investors, whose shares in electricity utilities, some of them
controlled but only part-owned by the state, have plunged by 50
percent or more since the rate cut plan was announced September.
A plan to offer early renewal of hydro-dam operation
licenses in exchange for electricity rate cuts has led to
concerns that utility revenue, profit and investment will
Last week Fitch Ratings cut the debt rating of state-led
Centrais Eletricas Brasileiras, or Eletrobras, Latin
America's largest utility to "BB" from "BBB" as a result of the