Falling sales indicate that gas aid is not going to buy cylinders, says sector

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The granting of aid for the purchase of cooking gas cylinders by low-income families has not had an impact on sales of the product, which indicates that the money is being used for other basic needs, says the sector.

According to data from the ANP (National Agency for Petroleum, Gas and Biofuels), sales of cylinders fell by 5.6% in the first four months of 2022, compared to the same period of the previous year.

Between January and March, the volume of cooking gas sold in 13-kilogram cylinders in the country is the lowest since at least 2017, also according to ANP statistics.

After a peak in sales in the initial period of the pandemic, when isolation measures led Brazilians to cook more at home, the sector has been suffering a fall since mid-2021, a reflection of the combination of a high price and the loss of purchasing power of the population.

In December, the government started paying low-income families an allowance of R$52 per month, equivalent to half the average price of a cylinder at that time. In April, the benefit reached 5.4 million people who are members of the Single Registry of social programs, at a cost of R$ 275 million.

The sector questions, however, the lack of rules for the allocation of resources, which are deposited in a bank account or through social savings. The persistent drop in sales, say executives, indicates that the program is deviating from its purpose.

“Auxílio-Gás is an excellent program, but without a specific destination, it does not fight energy poverty and provides a diversion of purpose”, says Sergio Bandeira de Mello, president of Sindigás (Union of LPG Distributors).

“The program is interesting, but it needs to be reformulated”, agrees José Luiz Rocha, president of Abragás, an entity that brings together cylinder resellers. “The resource has to be stamped to buy gas. In the current model, that money will end up being spent on something else.”

The gas aid started to receive strong support from the sector and social organizations during the economic crisis generated by the new coronavirus pandemic.

With the increase in unemployment, especially among informal workers, the poorest families began to seek alternatives for cooking, such as firewood and even alcohol, which led to an increase in care for burns in hospitals.

The situation worsened from mid-2021 onwards, with the recovery of international oil prices being reflected in the sale prices of the product by Petrobras and, consequently, by the resales of cylinders.

Fundamental in Brazilian homes, the product did not usually suffer as much impact from price changes. In 2021, however, sales fell by 4.2%, which led the government to announce the aid program at the end of the year.

A study released in April by the consultancy Kantar concludes that spending on gas cylinders commits 22% of the budget allocated to public services for the poorest families in Brazil, which includes electricity, water, sewage, telephone and taxes. For the richest, the share is 13%.

Another survey, also released in April by the Petrobras Social Observatory, shows that the price of cylinders is currently equivalent to 9.4% of the minimum wage, the highest percentage since 2007. In that month, the average price of cylinders hit a historic record in the country.

The high price started to impact even the solidarity distribution of warm food for homeless people in several Brazilian cities.

Rocha says the drop in sales and tight margins are leading dealers to give up on the deal. “As they are unable to pass on price, many entrepreneurs close their doors. Either pass on to survive or close.”

The sector suggests that the government include some device that links the use of resources to the purchase of cylinders. “Income program is excellent, but energy poverty is fought by substituting one source for another”, says Bandeira de Mello.

In 2017, already under the effect of the recession that started in 2014, charcoal and firewood once again supplanted cooking gas in the Brazilian residential energy matrix, according to data from the EPE (Energy Planning Company).

The situation lasted at least until 2020, when the latest data were released. With the pandemic crisis, the sector estimates that the scenario has worsened after this period.

Responsible for the distribution of resources, the Ministry of Citizenship did not comment on the matter. In a note sent to Sheetonly listed the program’s rules and indicated links to information pages about the amounts paid and questions about framing.

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