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The Minister of Mines and Energy, Moreira Franco, and the General Director of the ANP (National Agency of Petroleum, Natural Gas and Biofuels), Décio Oddone, advocated on the 23rd of this month for the review of the diesel price subsidy program.
The early termination of the diesel price subsidy program was argued by the Ministry of Mines and Energy (MME) and the National Agency of Petroleum, Natural Gas and Biofuels (ANP) on the 23rd of this month. The objective, according to the ministry and the agency, is to take advantage of the fall in international oil prices at this time, which eliminates the need for the subsidy, to make a smooth transition to market pricing.
The total reduction in diesel prices at refineries reached R$ 0.46. Of that amount, R$ 0.16 came from tax reductions, and the difference of R$ 0.30 was incorporated into the subsidy calculation.
“The Ministry of Finance is looking into this because it is a tax issue. So, they are seeing how to end this subsidy, because that is the agreement, but in such a way that it does not harm anyone. I think there is a possibility, because the price is allowing for a strategy to be developed in a way that the impact can be absorbed,” said Moreira Franco.
The amount is calculated based on a reference price set by the ANP, which considers international quotes and the costs of importing the fuel, simulating the market value of the product had there been no price controls.
“In my personal opinion, I believe it is time to review the subsidy,” said the general director of the ANP. “It is an opportunity to at least significantly reduce the amount of the subsidy.”
The government set aside R$ 9.5 billion to fund the subsidy until the end of the year, but with the drop in international prices, the full amount will not be used. Since the current program format has been in effect, starting June 8, the maximum subsidy of R$ 0.30 per liter has only been necessary on 39 days, equivalent to 23% of the period.
So far, the ANP has authorized the payment of about R$ 2.7 billion to reimburse companies that sold fuel at the controlled price.
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The general director of the ANP, Décio Oddone, emphasized that a new review of the controlled diesel price on the next 29th, to be applied in December, could generate more volatility, considering that by the end of December the diesel price may increase.
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