UPDATE 1-Brazil Cesp utility privatization called off

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SAO PAULO, March 25 (Reuters) - The planned privatization of Brazilian power utility Cesp (CESP6.SA: Quote, Profile, Research) has been canceled, the governor of Sao Paulo state said on Tuesday after potential bidders failed to make necessary financial deposits.

Gov. Jose Serra said the current market crisis made it difficult for interested buyers to participate in the tender for the state-run utility that was scheduled for Wednesday.

"They wanted a lower price, but we don't sell for a pittance," Serra told reporters in Sao Paulo.

The Sao Paulo state government was to offer its controlling stake in Cesp for a minimum price of 6.6 billion reais ($3.79 billion).

The shares of Brazil's third-biggest power utility fell more than 16 percent after the announcement.

The five potential bidders registered for the auction were Suez Tractebel, part of France's Suez Energy International (LYOE.PA: Quote, Profile, Research); Energias do Brasil (ENBR3.SA: Quote, Profile, Research), a subsidiary of Portugal's EDP (EDP.LS: Quote, Profile, Research); Neoenergia that has Spain's Iberdrola (IBE.MC: Quote, Profile, Research) as a key partner; U.S. aluminum producer Alcoa Inc (AA.N: Quote, Profile, Research) and Brazil's energy holding CPFL Energia (CPFE3.SA: Quote, Profile, Research). (Reporting by Carmen Munari and Daniela Machado, writing by Raymond Colitt; Editing by Andre Grenon)