Bolsonaro vetoes main articles on direct ethanol sales, but government says marketing is already possible

On Monday (3), president Jair Bolsonaro (PL) vetoed the main articles of the law that authorizes the direct sale of hydrated ethanol fuel by producers and importers through the retailer, without the intermediation of distributors, which was previously mandatory.

Palácio do Planalto says, however, that direct marketing has been possible since October of last year, as a result of a resolution by the ANP (National Petroleum Agency), although it is necessary to draw up specific rules.

“The veto will not prevent direct ethanol sales operations, since this matter may be regulated by the ANP, which has already regulated this matter through Resolution No. 855, of October 8, 2021”, says Planalto.

The agency’s rule change was published a month after the government’s provisional measure that gave rise to the law passed in Congress.

According to interlocutors involved in the discussions, the government will assess with the sector whether it will be necessary to issue a new law or whether the resolution would be sufficient.

In response to a request from the Ministry of Economy, Bolsonaro vetoed the first two articles, which dealt precisely with direct sales, due to the inclusion of producing and trading cooperatives.

The folder’s argument is technical and concerns only these cooperatives: it would create fiscal waivers without a budget forecast, which could harm the Fiscal Responsibility Law, and distort sectorial competition.

According to Palácio do Planalto, cooperatives are already receiving a benefit that generally reduces to zero the calculation basis of the Contribution to PIS/Pasep and Cofins.

The law provides for changes in the legislation that deals with these taxes to avoid loss of revenue. The measure seeks to ensure that the tax burden of social contributions levied on the ethanol chain will be the same both in the case of direct sales by the producer or importer to the retailer and in the one intermediated by a distributor.

The provisional measure issued by the Bolsonaro government, which gave rise to the law, prohibited the exemptions from the base for calculating the contribution to PIS/Pasep and Cofins that currently exist for cooperatives. But lawmakers withdrew this excerpt.’

The president’s veto will be analyzed by deputies and senators.

The government edited the MP with the intention of trying to increase competition in the fuel market. The bet was that the price of gasoline would be reduced by up to R$0.50 per liter, as a result of increased competition.

The promise of gains from the changes is questioned by the fuel market and potential damages to the consumer were the subject of a challenge by the Procons in a public consultation by the ANP to debate the changes.

Distributors and the defense of competition are specifically concerned with the possibility of selling fuel from other brands at service stations. For consumer protection agencies, the measure violates legal provisions that guarantee the right to clear, precise and adequate information.

The text was approved by the Senate, unanimously, on December 8th. The senators accepted changes made by the Chamber to the provisional measure, issued by the federal government.

One of the changes removed one of the main items from the MP, which allowed the stations to resell fuel from more than one brand.

The possibility of flexibility generated conflicts and confusion in the market. Furthermore, critics claimed that it would lead consumers to be deceived.

As an alternative, authorization for the retail resale of gasoline and hydrated ethanol outside the authorized establishment was included, limited to the municipality where it is located. For this, regulation by the ANP (National Agency for Petroleum, Natural Gas and Biofuels) will be necessary.

The final version also included the forecast that it will not be necessary for the company to demonstrate links with other agents in the biofuels industry in order to obtain authorization for the purchase and sale of ethanol.

Elsewhere, the law that establishes crimes against the economic order was changed so that the crime of using liquefied petroleum gas is restricted to use only for automotive purposes. Currently, the use in engines of any kind, saunas, boilers and pool heating, or for automotive purposes is prohibited.