Brazil's energy minister was to meet with President Luiz Inacio Lula da Silva to discuss his fate as police investigate him over accusations he embezzled money from public works projects, the latest scandal to hit the corruption-prone Lula government.

The minister, Silas Rondeau, would either be fired or would step down temporarily, local media reported, citing unnamed aides to Lula.

Rondeau, who has denied any wrongdoing, has played a crucial role helping Lula start work on an ambitious series of infrastructure projects aimed at boosting economic growth and preventing electricity shortages in the future.

Police have already arrested 50 people for skimming money from infrastructure projects, including Rondeau's senior adviser, in what they have dubbed Operation Razor.

The crackdown has raised concerns over Lula's four-year plan for about US$250 billion of public and private investment in roads, railways and airports, as well as controversial hydroelectric plants in the Amazon region.

Rondeau would be the first minister of Lula's second term, which started in January, to quit over corruption allegations.

Scandals including bribery and vote-buying in Congress ousted the two most powerful ministers of Lula's first term, his then Chief of Staff Jose Dirceu and Finance Minister Antonio Palocci.

Corruption schemes

Lula has denied involvement in the alleged corruption schemes and insists that federal police have the independence to investigate whomever they choose.

In the past, federal police have wiretapped Lula's own political party and used evidence from security cameras at hotels and airports to investigate government officials and businesses.

Rondeau commands a large budget, makes policy on Brazil's leading biofuels programme, and sits on the board of state-controlled oil company Petrobras.

Federal police said they suspected he may have received a 100,000 reais (US$51,000) kickback from a construction company that won a government contract to bring electricity to poor households.

Justice Minister Tarso Genro confirmed the investigation but said there was no proof directly implicating Rondeau.

Adriano Pires, head of the Brazilian Center for Infrastructure consultancy, said the government should move quickly to replace Rondeau if he is forced to quit.

"The electricity sector already has investment problems, delayed projects, infighting over environmental permits. Everyone is worried about possible power shortages," he said.

-Reuters