Petrobras Reverses Gasoline Price Hike, Cites Tax Cuts
Petrobras reversed an earlier announcement of higher gasoline prices, saying new government tax cuts will reduce consumer costs by 0.19 real per liter.
Brazilian state-run oil company Petrobras has reversed an earlier announcement that would have raised gasoline prices to distributors, saying a new package of government tax measures will instead lower costs for consumers.
The company initially said late on Wednesday it would end a discount of 0.44 real per liter while effectively raising prices, leaving the distributor price at 3.24 reais per liter. Early on Thursday, Petrobras issued a correction clarifying that a fresh government measure would lower the price of gasoline to distributors at its refineries.
The government announced on Wednesday it would cut federal taxes on gasoline imports and sales by 0.63 real per liter, replacing and expanding a previous cash subsidy of 0.44 real per liter. According to Petrobras, the tax reduction more than offsets the end of the discount, resulting in a lower final price.
"For distributors, the effect will be a reduction of 0.19 real in the perceived price with taxes," Petrobras said.
The government also announced a diesel subsidy initially set at 1 real per liter, to be added to an existing subsidy. Petrobras said it will wait for the government to publish the legal acts regulating the new diesel subsidy before assessing and implementing it.
The gasoline price cut comes as President Luiz Inacio Lula da Silva seeks a fourth non-consecutive term in an election with first-round voting scheduled for October 4.