SAO PAULO, May 25 (Reuters) - Brazil cannot afford to cut local fuel prices, which already lag the international market, the chief executive of energy company Raizen told investors on Wednesday.

"If gasoline prices were cut, Brazil would not have the capacity to meet all the demand, so it would have to import ... and imported gasoline is much more expensive than local prices," the CEO Ricardo Mussa said.

Reuters reported last week that state-run Petrobras had warned Brazil's government that its diesel pumps could run dry this year if it sold fuel below market price. Days later, the firm's chief executive was ousted.

At the Raizen investor event, Mussa also flagged the risk of diesel shortages due to the war in Ukraine, which caused international prices to spike and created supply uncertainties. However, he argued the risk could still be controlled.

The executive added the priority for Raizen, one of Brazil's largest fuel distributors, is to guarantee supply and avoid fuel shortages.

The firm, a joint venture between Cosan SA and Shell, is now expected to accelerate its plan to expand second-generation (2G) ethanol plants, aiming to have 20 2G units by 2031.

Raizen currently has one 2G plant in operation and three others under construction. (Reporting by Roberto Samora and Nayara Figueiredo; Writing by Gabriel Araujo and Peter Frontini; Editing by David Gregorio)