Petrobras delivers LPG sold at steep premiums despite Lula move to annul auction
Brazilian state-run oil firm Petrobras has delivered liquefied petroleum gas auctioned off at high prices, even after President Luiz Inacio Lula da Silva said the government would annul it to protect consumers from fuel spikes, two sources said.
On Thursday morning, Lula said in an interview with TV Record Bahia that Petrobras staff conducted the auction without management's knowledge, and that there was a guidance to not raise LPG prices to consumers, even though global prices have spiked due to the war in Iran.
The full volume of the Tuesday auction could be sent to distributors by the end of the week, said one of the sources, even though oil regulator ANP has said it would investigate the tender, citing suspicions of price gouging.
Petrobras' pumping LPG to clients at the higher prices goes against the government's aims to keep fuel prices down in a year during which Lula has been campaigning for reelection.
Lula noted in the same TV interview that some of the LPG was auctioned off at a 100% premium over Petrobras' reference prices. Poorer Brazilians in Lula's electoral base are sensitive to LPG prices because they use it for cooking.
CANCELLED AUCTIONS. Higher fuel prices are a challenge for Petrobras, as it seeks to satisfy the government, its majority shareholder, while also fulfilling its mandate to turn a profit on fuel sales.
Last month, Petrobras cancelled diesel and gasoline auctions after premiums emerged ranging from 1.80 to 2.00 reais per liter of diesel over refinery prices.
It then decided to supply the fuel through existing contracts, meaning it would sell diesel at lower prices than if it were auctioned off, sources have said.
While Petrobras is a major LPG and diesel producer, Brazil still relies on imports, making it vulnerable to international price fluctuations.
Since the U.S.-Israeli war on Iran began, Lula's government has announced a series of measures to lower prices for consumers, including a tax on oil exports.
Oil regulator ANP has also launched a campaign to fight price gouging at gas stations.
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