By Leonardo Goy and Anna Flavia RochasBRASILIA/SAO PAULO, Oct 18 (Reuters) - Brazil’s state-run power utility Eletrobras could pare back ambitious investments in Latin America’s largest economy as the renewal of electric concessions threatens to pinch cash flow.Brazil is nearing a decision this year on power industry concessions, with signs pointing to a steep cut in rates for almost all of Eletrobras’s transmission contracts and about 40 percent of its generation contracts.”No one is taking care of this. Cash flow is going to fall off steeply at Eletrobras and the government isn’t giving the issue due attention,” said a lawmaker in the governing coalition, who asked not to be named.The government is aiming to reduce the sale price of power by as much as a third, as many generators have long since paid off their original investments.Electricity rates in Brazil are among the world’s highest, but this is in large part due to heavy taxes that provide a steady source of income for the government — crucial for Brasilia as the government seeks fiscal balance.Eletrobras, the country’s biggest power company, now faces the possibility of lower revenues just months after it pledged to double the pace of investments to keep up with Brazil’s power-hungry economic growth.Major projects include a plan to build the world’s third largest hydroelectric dam, the 11,200-megawatt Belo Monte project due to start producing power in 2015.For those investments to go ahead as planned, the government may have to inject more resources into its state-run utility, according to energy consulting firm PSR. Eletrobras could lose 4.5 billion reais ($2.5 billion) in annual revenue under renewed concessions, PSR said in a recent study, equal to half of this year’s investments.However, a government source told Reuters on condition of anonymity that policymakers are not looking at compensation for Eletrobras. The company declined comment on the issue.”If they lose revenue, then it’s lost. That’s part of it,” the head of Brazil’s electric regulator, Nelson Hubner, told Reuters.Hubner argued that an eventual drop in revenues for Eletrobras will not necessarily slow investments, suggesting financing for projects could be secured against future revenues from new installations.Eletrobras is testing market appetite on a road show this week for a bond issue worth up to $2.5 billion, at a time when most Brazilian companies are backing away from financial markets shaken by Europe’s tussles with debt concerns.

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