After the increase in petrol, what is the future of fuel prices in Brazil? | THE WEATHER

THE readjustment of BRL 0.23 in the price of petrol, announced by Petrobras this Tuesday (24), reinforces the urgency of the discussions on the fuel pricing policy that will be adopted by the state company under the direction of Luiz Inácio Lula da Silva (PT). That’s what the experts have heard THE WEATHER.

The increase takes effect this Wednesday (25) and is still the result of the decisions taken by the board of directors formed in the government of former President Jair Bolsonaro (PL), following the Import Parity Price (PPI) policy.

In practice, the methodology uses the dollar exchange rate for a barrel of oil on the international market and the cost of import taxes as a parameter to establish a fuel sale price in Brazil. During the presidential campaign, Lula repeatedly cited the desire to “Brazilianize” the data on pumps, in reference to a possible disengagement of the PPI, for a new policy.

“We will seek financing and collaborations – national and international – for investments, to relaunch and expand the domestic consumer market, to develop trade, exports, services, agriculture and industry. Public banks, in particular BNDES , and companies that drive growth and innovation, such as Petrobras, will play a key role in this new cycle,” the president said in his inaugural address to the National Congress.

Another promise was to increase investment in refining. Last year, THE WEATHER showed that the financial contribution of the state company, between 2016 and 2022 – under the influence of the PPI – to increase the autonomy of the refineries, represented only 14% of the total profit. The policy change, however, involves the appointment of Senator Jean Paul Prates (PT/RN), appointed to the command of Petrobras, says the economist of the Social Observatory of Petroleum, Eric Gil Dantas.

The company’s board of directors will meet next Thursday (26th) to analyze the name. “I think the emergence of the theme is increasing for two reasons. The first is the deadline for federal fuel tax exemptions. Like diesel, which is exempt until the end of the year, in others (Cide, Pis and Cofins) it ends at the end of February. The second is because we have had an upward trend in recent weeks, both for petrol and diesel, in the international market”, recalled the economist.

In the early days of his term, Lula ignored requests from the economic team and maintained the federal government’s fuel tax exemption. The zero collection of federal taxes would have ended on December 31, but has been extended until February 28. “Politically, it will only be able to resume collecting federal taxes if Petrobras manages to reduce the price of gasoline and diesel. These components are increasing the pressure for there to be some change in the pricing policy, which I don’t know if it will happen as soon as he (Jean Paul Prates) takes over, because there is the question of the formation of the Board of Directors during the Bolsonaro government,” he said. added.

Eric Dantas, who is also part of the team of the Brazilian Institute of Political and Social Studies (Ibeps), points out that to change the pricing policy it will be necessary to reformulate the directions of the state-owned company. The latest change occurred last year, during attempts by the Jair Bolsonaro government to contain fuel hikes. “The current board still has a vision of the previous management, which was to raise the price as much as possible to distribute the maximum possible dividends. I don’t see these councilors giving up this source of income to obtain a reduction in the price of fuel for the final consumer,” Dantas reiterated.

According to the representative of the Social Observatory of Petroleum, starting from the inauguration of the new presidency and the establishment of a new price policy, there should be a reduction in the company’s profits. The decline should also be linked to the increase in investments in refining, promised by Lula during the electoral campaign. It is not yet known what the basis for the increase of this contribution will be, nor how petroleum derivatives will be priced in Brazil.

The report sought to contact Senator Jean Paul Prates for more details, but received no response. Petrobras said in a statement that it is not possible to specify a date when the new presidency will take over the company. In a note, the Single Federation of Petroleum Workers (FUP) criticized the reorganization of Petrobras, before the new president took office.

“The market and Abicom (Brazilian Association of Fuel Importers) stated that the gap for petrol was 14% and for diesel 9%. Now that the elections are over, they are trying to close this gap, due to the pressure from minority shareholders, and blaming the new government, which has not yet managed to take over Petrobras as the majority and controlling shareholder it is”, he denounced.

emergency mattress

Although he has not yet taken a public position on plans for the state-owned company, Jean Paul Prates defends the creation of a mattress to cushion fuel increases. The reserve is even provided for in the bill (PL) 1.472/2021 presented by Prates to the Senate.

The text provides for the creation of a stabilization fund that can be used in periods of strong pressure on fuels, as recorded in the first half of 2022 under the impacts of the war in Ukraine. The proposal establishes the guidelines for the sales price policy of petrol, diesel and cooking gas, establishing that the internal prices charged by producers and importers have as a reference the average quotations of the international market, the internal production and import costs .

The PL has already been approved in the Senate and sent to the Chamber of Deputies for further study. The president of the Brazilian Association of Fuel Importers (Abicom), Sérgio Araújo, said the proposal could unite the interests of Petrobras’ minority investors with the social agenda defended by the government.

“It is a path that can be followed to satisfy social demand, but also to preserve those who have invested in Petrobras”, he commented.

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