Petrobras will reduce fuel prices to offset increases in fuels taxes
Brazil's state-run oil giant Petrobras said on Tuesday it will reduce gasoline and diesel prices at its refineries from Wednesday, a move that will likely offset the resumption of federal taxes levied on fuels.
Shares in the company dropped sharply after the news, trading down more than 3% by midday and making Petrobras one of the biggest fallers on the local benchmark stock index Bovespa , which slipped 0.5%.
The price cut comes as the government announced on Monday it was set to resume the collection of taxes on fuels, ending a waiver set by former President Jair Bolsonaro last year - a measure that will boost government revenues but is seen as upsetting the middle class.
Brazil's finance ministry had already stated earlier in the day that cutting Petrobras prices was being considered as a way to counterbalance the effect of the tax increase, confirming a Reuters report citing sources.
Petroleo Brasileiro SA, as the oil firm is formally known, said in a statement on its website it will lower average gasoline prices by nearly 4%, while diesel prices will be reduced by roughly 2%.
Gasoline will now be sold at 3.18 reais ($0.6103) per liter, down from 3.31 reais, and diesel at 4.02 reais, against 4.10 reais earlier, the company said, adding the move was aimed at keeping local markets "in balance" with global rates.
The announcement came minutes after Brazil's government said Finance Minister Fernando Haddad would provide details on plans for fuel taxes in a press conference at 7 p.m. local time (2200 GMT).
"We are still waiting for more information about the tax resumption to see if the net effect (of Petrobras' price cut) will be really negative," said Guilherme Sousa, an economist at Ativa Investimentos.
The ministry had announced on Monday it would reimpose taxes on gasoline and ethanol, but that the rate on the fossil fuel would be higher than that levied on the biofuel.
The government, nonetheless, would still recover 100% of tax revenues that had been waived since 2022, it added.
Reuters reported earlier on Tuesday that the government and Petrobras had opened discussions on the possibility of the company cutting its own prices as a way of offsetting the impact on consumers' pockets.
According to two sources familiar with the matter, who asked not to be named, the parties saw room for the firm to reduce both gasoline and diesel prices as local rates have been higher than those in international markets.
"There is room for compensation within the import parity policy," one of the sources said, referring to Petrobras' official policy of tracking international rates such as global fuel prices and foreign exchange.