* Utility to cut costs by 10 pct in 2013 -source
* Company seeks generation, transmission rights
* Renewals may cut $4.1 bln in revenue a year
By Leonardo Goy
BRASILIA, Nov 26 (Reuters) - Brazil’s state-led electricity holding company Centrais Eletricas Brasileiras SA plans to bid for new power generation and transmission rights, a source close to the company told Reuters on Monday.
Eletrobras, as the company is known, would bid even if a government plan to renew hydrodam concessions early in exchange for reduced tariffs slashes company revenue.
To help make up for a potential revenue cut, Eletrobras wants to cut operating costs by 10 percent in 2013, the source said. In the first nine months of 2012, it spent 6.09 billion reais ($2.93 billion) on salaries, goods and services - 8.8 percent more than a year earlier.
Shares of Rio de Janeiro-based Eletrobras have fallen nearly 60 percent since Brazilian President Dilma Rousseff announced a plan to offer early renewal of hydroelectric dam concessions in exchange for cuts in electricity rates of 20 percent or more.
Other Brazilian electric utility shares have fallen since the announcement on concerns the plan would slash revenue, profit and investment. Some companies, such as Cia Energetica de Minas Gerais and Cia Energetica de Sao Paulo , are resisting renewals unless the tariff-cutting terms are improved.
Eletrobras’ board has recommended that shareholders in the Rio de Janeiro-based utility accept the government’s offer in a special meeting on Dec. 3. Eletrobras said it expects the renewal plan will cut annual revenue by 8.7 billion reais ($4.1 billion).
With the government owning a majority of Petrobras voting stock, shareholders are expected to back the renewal and tariff cuts.
The government sees the renewal as key to kick-starting Brazil’s economy in the face of recession and slowdown in two of its main markets, Europe and China.
Brazil has some of the highest power costs in the world, even though more than three-quarters of its electricity comes from hydro, which is cheaper than oil and natural gas.
Eletrobras is also concerned it will lose the concessions if they expire. Normally the concessions would revert to the government on expiry and be auctioned to the highest bidder. Eletrobras officials told Reuters in May were concerned the company would be unable to win bids against better-capitalized foreign companies. In recent years, Rousseff’s government has moved to discourage foreign companies from buying stakes in Brazilian utilities.
Eletrobras preferred shares trimmed early gains in afternoon trading on Monday on São Paulo’s BM&FBovespa exchange, rising 5.06 percent to 8.09 reais after gaining as much as 13 percent earlier in the session.
The Bovespa index of the most-traded stocks on the BM&FBovespa exchange was down 1.55 percent.