* Profit exceeds expectations but down nearly 50 pct
* State monopoly tariffs frozen in H1
* Federal Grid's H1 costs rise 17 pct
* Energy Minister confirms consolidation plan (Adds forecasts, detail)
MOSCOW, Nov 15 (Reuters) - Russian state-controlled power group Federal Grid Co reported first-half net profit down nearly 50 percent after margins were squeezed by rising costs and a government block on price increases.
Concern about inflation has made the government reluctant to raise regulated tariffs for most state-regulated monopolies.
Tariffs for all monopolies but the railway were frozen in the first half of the year, resulting in a 6 percent decline in Federal Grids' revenues, while its costs climbed by 17 percent.
The state-controlled grid operator, subject of heated debate in government on the best way make profitable investments in utility infrastructure, reported adjusted first-half net profit of 14 billion roubles ($441 million), beating a forecast for 11.7 billion roubles but down by nearly half on last year's 22.8 billion roubles.
Energy Minister Alexander Novak on Thursday confirmed earlier reports that the Kremlin had decided to go ahead with a plan to consolidate the country's electricity networks around MRSK, a holding company that controls Russia's regional distribution networks.
The plan aims to reduce overheads and increase efficiency to free up funds for investment.
Federal Grid's adjusted net profit excludes depreciation of liquid securities held by the company, it said in a statement. Including those items, net profit was 3.91 billion roubles. ($1 = 31.75 roubles) (Writing by Melissa Akin; Editing by David Goodman)