Brazil Petrobras adopts fuel policy, raises diesel, gasoline prices

29 November 2013 23:45 Source:ICIS News

MEDELLIN, Colombia (ICIS)--Brazil’s state-run energy giant Petrobras said on Friday that it has adopted a new fuel pricing policy in an effort to improve the company’s finances but did not disclose how the new mechanism would work.

Fuel prices in Brazil are fixed and controlled by the federal government in efforts to control inflation and spur economic growth.

However, this has had a detrimental impact on the company’s finances, as the lack of refining capacity forces the Petrobras to import – at international benchmark prices – large quantities of refined products to meet domestic demand.

According to the company, the new policy aims to “make prices in Brazil converge with international benchmark prices, within a compatible period”.

The policy also seeks to “assure debt and leverage rates return to the limits established in the 2013-2017 business plan within 24 months”, the company said.

In line with the new pricing policy, diesel and gasoline prices at the refinery gate would be raised by 8% and 4%, respectively, effective from midnight, Petrobras said.

The company raised gasoline and diesel prices in January this year by 6.6% and 5.4%, respectively.

By Simon West