Brazil Sao Paulo ditches Cesp privatization-report

SAO PAULO, Feb 11 (Reuters) - The government of Sao Paulo, Brazil's richest and most populous state, has abandoned plans to privatize electricity generator Cesp (CESP6.SA), Folha de S.Paulo newspaper reported on Thursday, citing an interview with the company's chief executive.

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Sao Paulo state governor Jose Serra, the likely presidential candidate from the opposition PSDB party for the October elections, has ordered Cesp to resume investments on new power plants and begin studies for possible takeovers, Folha said.
Serra wants Cesp to follow on the steps of Cemig (CMIG4.SA)(CIG.N), the Minas Gerais state controlled utility that has invested heavily on electricity generation and has gone on an acquisition spree recently, the daily reported.
Cesp, which is controlled by Sao Paulo state, had been scheduled for privatization since late 1990s, but a Brazil-wide power shortage and subsequent rationing in 2001 delayed the plans. Sao Paulo state's most recent plan to sell its stake in the utility in 2008 was canceled because of a slump in equity markets.
"Now that we're over that phase of the thwarted privatization plans - and today this is an issue that is no longer under consideration - we are getting back to the normal phase of a company that has a series of plans for the future," Cesp's Chief Executive Vilson Daniel Christofari told Folha.
Cesp plans to invest initially in small power plants within Sao Paulo state and in wind farms, Christofari added. The company will only adopt a model similar to Cemig's, expanding beyond Sao Paulo, at a later date, Folha said. (Reporting by Elzio Barreto; Editing by Derek Caney)
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