Brazil expected to announce stimulus package for ethanol sector

23 April 2013 17:44  [Source: ICIS news]

Brazil expected to announce stimulus package for ethanol sectorMEDELLIN, Colombia (ICIS)--Brazil, the world's biggest ethanol exporter, is expected to announce a stimulus package for ethanol producers in a move to boost production and investment in the sector, players in the market said on Tuesday.

The stimulus package will likely include loans specifically set aside for the sector, interest rate reductions and a reduction of the tax burden on producers, buyers and sellers said.

The main objective of the package is to encourage producers to invest more in biofuel production by increasing the supply of the product to lower the price of fuel at the pumps.

The plan comes as ethanol mills start processing a record sugarcane crop and rising gasoline imports by state-run Petroleo Brasileiro (Petrobras), sources in the sector said.

Ethanol output in Brazil, where the fuel is made from sugarcane, will rise to 25.8bn liters (6.8bn gal) in the 2013/2014 crop year that started this month, from 23.6bn in the previous season, the government said on 9 April.

Brazil will increase its ethanol blending rate to 25% from 20% on 1 May, the government said in January.

Brazil blends anhydrous ethanol into gasoline. The country uses hydrous ethanol as a stand-alone fuel in flexible-fuel vehicles (FFVs), competing directly with gasoline.

Brazil had lowered the blend rate to 20% in October 2011 because the country had insufficient supplies of anhydrous ethanol to meet demand.

By: Leela Landress
+1 713 525 2653

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