Brazilian Institute of Oil and Gas Defends Loyalty to Fuel Branding at Service Stations and Says Proposal Approved Yesterday Does Not Benefit Consumers in Terms of Price

Brazilian Petroleum and Gas Institute Has No Restrictions on the Direct Sale of Hydrated Ethanol. Meanwhile, It Believes That Fuel Prices Will Not Benefit Consumers with the End of Brand Loyalty

The Brazilian Petroleum and Gas Institute (IBP) positions itself regarding the changes in fuel commercialization approved yesterday (11/08) by the Government, which advocates for the direct sale of ethanol from refineries and the end of brand loyalty at gas stations. The agency supports the current rules governing the resale market for derivatives, which allows coexistence between non-exclusive brand models and exclusive ones, ensuring consumers of fuels across the country that the products of the brand displayed at the stations come from the distributor with which the reseller has a commercial partnership. This point is a premise for transparent and fair competition.

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In this sense, the Institute expresses surprise regarding the Provisional Measure presented this Wednesday (11.08), which opens up the possibility of commercializing products from other suppliers at stations with specific brands, considering the current regulatory review process being conducted by the ANP (National Agency of Petroleum, Natural Gas and Biofuels).

Brazilian Petroleum and Gas Institute Believes the Proposal Offers No Benefits in Terms of Price and Information to the Consumer

We believe that the legislative proposal does not offer benefits in terms of price and information to the consumer but increases regulatory and fiscal costs and creates a disruption in a very mature and complex market.

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In Brazil, gas stations already have the option to display or not display commercial brands from distributors. The so-called “white flag” stations represent about 47% of the market, showing competition between models.

The maintenance of brand loyalty displayed at reseller stations gives consumers certainty about the origin of the products. The customer has the right, guaranteed by the Consumer Defense Code, to identify the commercial brand of the distributor with whom they frequently interact and have more confidence in the products and services offered. In addition to the operational difficulties in segregating products of different origins in tanks and pumps and the virtually impossible separation of any added in-person and digital services, the clarity of communication to consumers will be compromised.

IBP Has No Restrictions on the Direct Sale of Hydrated Ethanol

IBP reinforces the need to respect brands for the benefit of consumers and the contracts and business models established as a fundamental pillar for the legal and competitive security necessary for making investments and ensuring supply across the vast national territory.

Regarding the direct sale of hydrated ethanol, IBP has no restrictions on its release as long as it includes the necessary tax treatment to preserve commercial and competitive equality among economic agents, pillars for an efficient and healthy market. The measure addresses PIS/Cofins taxation, but the ICMS regulation still needs to be settled by the Federal States.

The Institute also emphasizes the essential role of the ANP in regulating this important sector through established regulatory processes transparently and continues to believe that there are priorities for regulatory evolutions in the sector, particularly regarding the divestment process of Petrobras refineries, the fight against tax evasion of R$ 24 billion annually, and the structured inclusion of increasing biofuels in the transportation matrix.