Brazilian state-controlled energy firm Petrobras (PETR4.SA)(PBR.N) will cut refinery prices for gasoline and diesel, the company said on Monday, but a rise in taxes on gasoline will keep rates the same at the pump.
The firm would reduce gasoline prices from Tuesday by 4.5 percent while a much larger cut of 15 percent would apply to diesel.
Brazilian economy minister Guido Mantega told reporters on Tuesday that an increase in a tax on gasoline, known as the Cide, meant there would be no change in the price to the consumer. Taxes on diesel would also be increased but the price at the pump would still fall by 9.6 percent overall.
“The price (of gasoline) will stay the same, it won’t change,” he said.
“(It is) the inverse of what happened last year when the price rose and the Cide was reduced so there would be no impact on the end consumer. The increase in (taxes) will go to the states and municipalities,” Mantega told reporters.
He said the reduction in pump prices for diesel was “an anti-crisis measure” to keep prices down for consumers of the fuel, mainly companies operating fleets of trucks. Brazil has very few diesel-powered cars.
When oil prices spiked last year, Petrobras kept rates to the consumer stable in line with a policy of cushioning consumers from sharp fluctuations.
More than 90 percent of new cars sold in Brazil have “flex-fuel” technology which enables them to run solely on gasoline or on ethanol produced from the country’s huge sugar cane crop or any mixture of both.
Pump prices for ethanol have also come down substantially in the last two months as the supply swells at the peak of the cane harvest. Ethanol producers are also in a rush to raise cash after the global crisis made it hard to obtain loans.