Bolsonaro promised Russian diesel, but imports were just 0.5%

Contrary to what former President Jair Bolsonaro promised last year, imports of Russian diesel by Brazilian importers remained insignificant and similar to the level recorded in previous years. According to executives and other professionals in the sector, the former government’s promises were intended only to reduce the political pressure surrounding the high fuel prices in the country at that time – in practice, the public administration did little to guarantee the transactions.

Also in July, Bolsonaro announced that his government was negotiating an agreement to buy diesel from Russia, and that the first loads could arrive in Brazil in two months. “We are quite advanced in the issue of supplying diesel to Brazil. The cheapest price. How many percent? I don’t know. The cheaper, the better,” he said.

The balance of the following months showed that his government really knew little about how to carry out operations. Until November, Russian diesel accounted for only 0.5% of diesel imports by Brazilian importers, according to the ANP (National Agency of Petroleum, Natural Gas and Biofuels). The number is very close to that recorded in previous years – 0.2% in 2021 and 0.6% in 2018 and 2017. In 2020 and 2021, the country did not import diesel from Russia.

The main obstacle, according to importers consulted by the Sheet, was like paying Russian oil companies amid the series of sanctions against the European country due to the Ukraine War. Some of Russia’s major banks have been excluded from Swift, the international system that financial institutions use to transfer money, and carrying out transactions would require circumventing those hurdles.

In addition, American financial institutions stopped granting bank guarantees to Russian diesel importers. This happened, for example, with Uptime, a company from Santa Catarina that still in May obtained licenses from the ANP to bring 25 thousand tons of Russian diesel to Brazil. At the time, however, the bank that usually issued the guarantees for the company withdrew from the operation, and the purchase had to be interrupted – the granting of licenses does not oblige the company to proceed with the transaction.

“The Brazilian government should have offered a guarantee and stayed as collateral in the operation, since Brazil has no problems with Russia. The Bank of Brazil itself could have created mechanisms to offer this guarantee”, says Eraldo Rosa, president of the company.

A similar situation happened with another company heard by the Sheet under anonymity. In this case, however, the importer managed to solve the problem by importing diesel from Russia through ports in India.

Between July and August, the importers met several times with representatives of the Bolsonaro government and Russian oil companies in search of solutions to the impasses. Officials from the Itamaraty and the Central Bank would also have participated in the meetings, but no agreement was reached.

“At times, the government said it was importing and advancing, when in fact nothing was closed and no ships were coming”, says Sérgio Araújo, president of the Brazilian Association of Fuel Importers. “The government announced that the solution was designed, when in fact it was not.”

When contacted, the Ministry of Mines and Energy said it would not comment on the case. THE Sheet he also sought out the former executive secretary of the portfolio, Hailton Madureira, and the former secretary of Petroleum, Natural Gas and Biofuels, Rafael Bastos, but both said they had no information about the negotiations.

The rhetorical insistence of the Bolsonaro government had political reasons: in July, a liter of diesel cost more than that of gasoline and ethanol at some gas stations and even exceeded the amount charged for gasoline with additives. In addition, the Executive had little to do to reduce the values, since it had already zeroed the federal taxes on the product.

Bolsonaro then chose to sell the idea that his political contact with Russian President Vladimir Putin would help Brazil control fuel prices – under criticism from the United States, the two met in February, days before the Russian order the invasion of Ukraine.

Apparently, his ministers would also have been instructed to follow this path: at the end of September, the then head of Mines and Energy, Adolfo Sachsida, celebrated the arrival of 35 million liters of Russian diesel at the port of Santos. Four days later, Bolsonaro himself announced on Twitter the arrival of the same amount in Santos and said that other import operations were in progress.

At that point, however, the Bolsonaro government already knew that the importation was derisory. In all, the country imported more than 14 billion liters of diesel until November – imports of this fuel represent between 25% and 30% of domestic consumption, with the vast majority coming from the USA.

For Eric Gil Dantas, economist at the Social Observatory of Petroleum, importing Russian diesel, as announced by the government, made no sense. “It is easier for Russia to sell to countries like China and India than to sell to Brazil. Russian diesel production is very large, so the percentage that is imported by Brazil would not solve their lives at all”, he says.