Government pressures Petrobras to hold prices until ICMS project approval

With oil returning to operation above US$ 120 per barrel and the real again above R$ 5, Petrobras has been pressured by the federal government to hold on to readjustments at least until the approval of the project that establishes a ceiling for the ICMS (state tax) of fuels and energy.

The Chamber of Deputies approved this Tuesday (14) the complementary bill that establishes a limit for ICMS rates on fuel, energy, transport and telecommunications. Technical problems prevented the voting of highlights (proposals to modify the text), which will be appreciated this Wednesday (15). Next, the project will move on to the sanction of President Jair Bolsonaro (PL).

The government’s objective is to prevent a readjustment from overshadowing the approval of the project, which is used as an asset in the effort to try to lower fuel prices and electricity bills on the eve of the presidential election.

The proposal finds support within the company’s board of directors. In a note released this Tuesday, the company said that it “maintains its commitment to the practice of competitive prices and in balance with the market”, but avoids immediate transfers of external volatilities.

The ICMS ceiling is part of a series of government-sponsored fuel-related bills. This Tuesday (14), the Chamber approved a text that guarantees differentiated ICMS for biofuels.

Despite Bolsonaro’s appeals, the market expects further readjustments this week. The price of gasoline at Petrobras refineries has been unchanged for 96 days and the price of diesel had the last adjustment 36 days ago.

It is the longest period without gasoline adjustment since the import parity policy was implemented in 2016, according to a survey by Abicom (Brazilian Association of Fuel Importers).

The entity estimates that the gap between the average price of gasoline in Brazilian refineries and the import parity has reached R$ 0.73 per liter this Wednesday. In the case of diesel, the difference is R$ 0.99 per liter.

“With the increase in the exchange rate and in the reference prices of diesel and gasoline in the international market in relation to yesterday’s opening, the lag scenarios for both gasoline and oil have moved far from parity, which makes operations unfeasible. of import”, says the entity.

A representative of Petrobras’ top management told Sheet agree that any readjustments should wait for the approval of the project on the ICMS ceiling. The decision is made by a committee formed by the president of the state-owned company and the directors of Finance and Commercialization and Logistics.

The president, José Mauro Coelho, was fired by Bolsonaro at the end of May, but decided to remain in office until the appointment of his replacement, Caio Paes de Andrade, by a shareholders’ meeting. The meeting, which will renew the company’s board, does not yet have a date set.

The company has been defending that the lags generate supply risks for the Brazilian market, mainly for diesel, since private importers are less willing to assume losses with the sale of fuels at prices below international quotations.

Last week, it published a statement saying that the scenario “requires attention”, in yet another defense of the practice of prices in line with international quotations.

In addition, a deliberate strategy of price damming can lead to lawsuits against the company’s managers, such as those opened by the CVM (Securities Commission) against the company’s board of directors during the 2014 campaign.

In a note released this Tuesday, the company reinforced that it “continuously monitors the markets, which includes, among other procedures, the daily analysis of the behavior of our prices in relation to international quotations”.