The association of independent refineries asked the Lula Government for a reissue of the exemption from federal taxes. The objective of Refina Brasil is to include the purchase of oil in the national market along with diesel oil and LPG until December 31 of this year.

O market of independent fuel refining in Brazil is under great threat. The association of independent refineries Refina Brasil warned the Lula Government about a possible shortfall of BRL 5 billion with the end of the exemption from federal taxes, PIS/Cofins, on the purchase of oil in 2023. The objective is an edition in Provisional Measure 1157 /23 to extend the deadline for the purchase of oil, as well as LPG and diesel oil.

End of exemption from federal taxes on the purchase of oil, announced by the Lula government, could cause a billionaire gap in 2023

Independent fuel refineries in the Brazilian market ask the Lula Government for a new edition of Provisional Measure 1157/23.

As with the oil Diesel and LPG, the objective of the Refina Brasil association is to include the purchase of oil in the federal tax exemption until December 31 of this year.

Evaristo Pinheiro, representative of the newly created Refina Brasil, which brings together the six independent refineries in the country, said that there could be a gap of up to R$ 5 billion in the domestic market throughout 2023.

In March 2022, the Bolsonaro government issued a measure exempting all fuel from federal taxes until the end of his government, to contain inflation.

However, the new Lula government revised the measure, extending the exemption from federal taxes on diesel oil and LPG until the end of December this year. Meanwhile, gasoline, ethanol, natural gas for vehicles (CNG), aviation kerosene (QAV) and the purchase of oil had their deadlines extended until February 28.

This decision represents a high risk for the domestic refining market, as there may be a fuel shortage crisis, in addition to a high price increase.

Independent refineries work with a low margin and will not be able to sustain the end of the exemption from federal taxes on the purchase of oil announced by the Lula Government.

Independent refineries may become hostages of Petrobras in the national market with the end of federal tax exemption on the purchase of oil, highlights Pinheiro 

Evaristo Pinheiro commented on the current situation regarding the participation of independent refineries in the Brazilian market.

They represent only 20% of the country's consumption capacity, while most buy oil from Petrobras.

“As they are independent and Petrobras has 80% of the market, these refineries cannot pass on prices (to the filling stations) and will have to reduce the processed load, which will demand more imports from Petrobras and, consequently, price increases to avoid shortages”, highlighted the representative of Refina Brasil.

According to the association, the Ministries of Mines and Energy, the Chief of Staff and Industry and Commerce have already been contacted to deal with the matter, but have not yet received a response.

The Lula Government's decision to end the exemption from federal taxes on the purchase of oil comes at a time of great volatility in the price of fuel on the international market. Now, it remains for independent refineries to wait for a response from the current government regarding the future of the provisional measure.