President of Petrobras echoes Bolsonaro and sees “excess revenue” on fuels By Reuters

© Reuters. Petrobras logo in refinery 09/05/2021 REUTERS/Paulo Whitaker/File Photo

SAO PAULO (Reuters) – The president of Petrobras (SA:), Joaquim Silva e Luna, said in an article in the newspaper O Estado de São Paulo this Sunday, that there is excess tax collection on energy inputs, in reference to the process that gives rise to high fuel prices.

Last Friday, the state-owned company began a campaign to clarify fuel costs, noting that the amount received by Petrobras from the total paid by the consumer when filling up at ports reaches only 2 reais per liter.

In the article, Luna reaffirmed this value and detailed the composition of fuel prices.

“The succession of efforts by Petrobras to deliver quality fuel to the refineries is offset, in the case of gasoline, with only 2 reais, of the approximately 6 reais that the consumer pays to supply,” he said in the publication.

According to Luna, there is no doubt about the importance of the collection to provide resources for public policies that need to be implemented.

“The problem is the excess collection of energy inputs vital to the economy’s movement,” said Luna, echoing President Jair Bolsonaro, who has blamed governors for months for high fuel prices.

Luna explained that, at Petrobras refineries and terminals, gasoline, diesel and LPG are sold to distributors, which promote the mandatory mixing of anhydrous in gasoline and biodiesel in diesel, in addition to filling LPG in cylinders.

Afterwards, the fuels are sent to resellers. “Since it does not participate in the distribution or resale, Petrobras does not have the power to decide on the final price to the consumer”, highlighted the CEO.

He said that distributors add, on average, 0.59 reais. A 27% ethanol blend costs 1.02 reais. Added together, taxes take 2.50 reais, more than Petrobras’ share (estimates with data from the regulatory agency ANP between August 22 and 28, 2021). According to Luna, the ICMS, which is a state tax, corresponds to 1.65 reais per liter of gasoline, on average, a share close to that of the state-owned company.

By constitutional legislative provision, ICMS integrates its own calculation basis and focuses on the final price of the product. Bolsonaro sent a bill to change the ICMS system on fuels and last Friday filed a lawsuit in the Supreme Court (STF) to force Congress to enact, in 120 days, a law on the subject.

In the article, Luna highlighted the weight of ICMS in the final price of fuel.

“Thus, whenever prices at the refinery are readjusted, there is an increase in the ICMS value not only on this portion, but on the entire final sale price to the consumer, increasing its final effect”, he pointed out, citing that this logic applies to taxation on gasoline, diesel and LPG.

Federal taxes, PIS and Cofins have been zeroed since March/2021 in the case of LPG, when intended for domestic use and packaged in containers of up to 13 kg, recalled the executive.

Luna also pointed out that Petrobras does not have a monopoly on the sale of fuels nor is it able to invest, alone, to meet demand. For this reason, it adopts international parity as a price reference.

Part of the instability of prices in Brazil is due to the fact that they are based on the international quotation and the exchange rate of , which vary frequently.

(By Nayara Figueiredo)