Artificial gas price cut could make the market unfeasible, says CEO of Raízen

Brazil does not have room for cuts in gasoline prices, which are already far behind the international market, said Raízen CEO Ricardo Mussa this Wednesday, noting that discussions about tax changes “make more sense” for alleviating costs to consumers.

According to him, an eventual artificial reduction in the price would make it difficult for the market to be served, given the strong demand that would come, while imports today are made unfeasible by the lag in the domestic value of gasoline in relation to abroad.

“If you have a policy of cutting down the price of gasoline in Brazil, Brazil does not have the capacity to meet all the demand, it will have to import… and imported gasoline is much more expensive than gasoline from the local market” , he said.

The CEO did not go into details about the lag in the price of Petrobras’ gasoline in relation to the external price. Some analysts point out that the fuel sold by the state-owned company is more than 20% below the international value.

“So, any discussion of taxes makes more sense,” he added, referring to the bill that sets a ceiling of 17% for charging ICMS on fuel.

Mussa also said that “artificial” debates about changes that bring greater reductions in gasoline prices – a product that competes with hydrated ethanol at pumps – are harmful to Brazil, which cannot meet all its demand and needs to import fuel.

This week, the federal government decided to replace the president of Petrobras, José Mauro Coelho, after only 40 days of the executive in the position, and appointed Caio Paes de Andrade to the position amid harsh criticism of Bolsonaro’s fuel pricing policies.

A Reuters report showed the decision came after the oil company refused to sell fuel at a discount to consumers, warning that doing so would lead to diesel shortages.

The CEO of Raízen agreed that there is a risk of a shortage of diesel, due to the extension of the War in Ukraine. The Russians are important oil suppliers and the conflict has led to jumps in international prices and supply uncertainties.

Mussa highlighted, however, that the risk of lack of diesel can still be considered “controlled”, but the scenario is very complex.

“Today, the issue of diesel and gasoline in the world is a global discussion… You can’t just discuss Brazil”, he pointed out.

Regardless, he stressed that Raízen’s priority is to guarantee supply, and that the company works so that the product does not run out. “We’ve already told the government that.”

“It is difficult to make any scenario prediction, (but) we have navigated in several scenarios and we navigate well in any scenario”, he said about the company’s performance.

Regarding the current harvest, in which the sector increased its bets on ethanol, to the detriment of sugar, the CEO of Raízen pointed out that the company’s production mix is ​​still a little more sugary and any change would depend on the evolution of prices throughout the season.