Rousseff to cut rates for Brazil utilities to renew licences

Brazil is forcing power utilities to cut rates that manufacturers say are the fourth-highest in the world in a bid to make manufacturers more competitive. President Dilma Rousseff said today that businesses could see their electricity bills fall by more than the 28 per cent previously announced as part of her plan unveiled today to renew existing licenses of power companies including Companhia Energetica de Sao Paulo and Centrais Eletricas Brasileiras SA.

“The time has come to give back to society the benefits for paying for investments through a lower, just and balanced tariff,” Rousseff told executives from the energy industry at an event in Brasilia. “Cheaper energy means lower production cost and more resources for investments.” As growth in Latin America’s biggest economy has flagged, Rousseff’s administration has been shifting its focus from stimulating consumer demand to attacking the high costs of business that have long deterred investment.

Today’s energy reduction plan is part of a “new phase” of Brazil’s development that also include payroll tax cuts for select industries and the auctioning of licenses to manage roads, railways, ports and airports, Rousseff said. Lower utility rates will also help Rousseff tame inflation, which has remained above the government’s 4.5 per cent target since September 2010. Finance Minister Guido Mantega said today that the cut in electricity costs for households and businesses will shave between 0.5 and 1 percentage point off inflation starting next year. 

Bloomberg