Petrobras delays fuel adjustments, but continues to pass on increases, says study | Economy

Petrobras has delayed fuel price adjustments by around a month, but continues to pass on increases in the international market to Brazil, according to a study by Leggio Consultoria with data up to January 2024.

However, the study by Leggio Consultoria, obtained exclusively by g1shows that the state-owned company has kept the value of fuel just below the import price — around 5% lower.

In other words, despite Petrobras holding the adjustments for around a month, the increases are passed on to the consumer at a price slightly below that of importers.

“The point is that, when the price is rising, Petrobras only passes this variation in price around a month later”, said Leggio partner Marcus D’Elia.

However, when there is a decline in the international market, the state-owned company passes on the reduction more quickly. According to D’Elia, by holding the increase and quickly passing on the reduction, Petrobras does not take a loss.

“It is not possible to say that this policy is harming the company. I interpret it as strategic market positioning. Petrobras, I would say, is functioning correctly as a company that competes in the market, this is very positive for Brazilians”, declared D’Elia.

In fact, the state-owned company’s policy helps to avoid the passing on of instabilities in fuel prices, such as very high price spikes on the international market. It is the profit margin from these peaks that Petrobras fails to earn.

“She [a Petrobras] it only loses the difference between its price peak and the peak of the international market. Which I would say is a positive thing, that is, it is not bringing volatility to the national price. But he is losing very little,” she declared.

The consultancy compared the average prices charged by Petrobras for diesel and gasoline with the import parity values ​​published by the National Agency of Petroleum, Natural Gas and Biofuels (ANP), in the period from 2020 to January 2024.

The president of the Brazilian Association of Fuel Importers (Abicom), Sergio Araujo, says he does not see the increases being passed on. According to the executive, Petrobras has been holding the gasoline price adjustment, for example, since October 2023.

Abicom calculates daily import parity — unlike ANP, which is monthly — reflecting instabilities in the international market.

On Tuesday (30), the average gap between the price charged by Petrobras and that of the international market was 5% for diesel and 14% for gasoline.

“The last adjustment in gasoline that Petrobras gave was on October 21, 2023. There is no such monthly assessment and alignment, we are saying that there are almost seven months without an adjustment”, he declared.

Leggio’s study also points out that Petrobras’ pricing policy has been the same since 2022. In other words, the state-owned company had already stopped being completely aligned with international prices in the last year of the previous government.

“In its policy, it avoids passing on volatility, which is why price peaks do not appear, that is, you never have a peak as high as the international parity. This is something that Petrobras is actually doing and that it didn’t do before, in 2020 and 2021, but it already did in 2022 and continued to do in 2023”, said D’Elia.

The president of Abicom also notes that import parity had stopped being followed during the previous administration, under the government of former president Jair Bolsonaro (PL).

“Since 2019, we have had Petrobras consistently charging prices well below par and for long periods as well,” he stated.

In recent years, Petrobras adopted the so-called “import parity policy”. This means that the price of fuels sold to distributors in Brazil was determined by the cost of importing and bringing these products to national ports.

The strategy considered the exchange rate of the dollar and the barrel of oil, in addition to expenses with transportation, taxes and insurance. This caused the state-owned company to pass on instabilities to the domestic market.

But the pricing policy changed in May 2023, to meet the government’s desire, which wants to bring down fuel prices.

At the time, Petrobras explained that its prices for distributors would be in the range between:

• the highest amount a buyer can pay before wanting to look for another supplier
• and the lowest value that Petrobras can charge for the sale while maintaining the profit