Overview
Brazilian state-controlled oil company Petrobras said on Saturday that its board has approved participation in a new government diesel subsidy program that provides 1.00 real per liter for a 30-day term. The company noted the measure can be extended for a further 30 days and that this new support is cumulative with an existing subsidy of 1.12 reais per liter.
Pricing mechanics and immediate effect
Earlier in the week Petrobras announced an increase in diesel prices to distributors by an average of 1 real per liter while simultaneously granting a discount of the same amount. Because the announced price rise and the discount offset each other, Petrobras' reported prices to distributors remain unchanged. At the same time, the firm stands to benefit from the government subsidy.
Recent subsidy receipts and totals
In a separate statement, Petrobras said it received 448 million reais in payments linked to a gasoline subsidy program for sales between July 16 and July 31. The company reported that total accumulated subsidies across diesel, gasoline and LPG programs have reached 9.9 billion reais.
Political context cited by the company
Petrobras referenced actions taken since the start of the war in Iran, noting that Brazilian President Luiz Inacio Lula da Silva has sought to cushion the impact of higher oil prices. The company statement connected these measures to developments ahead of the October presidential election, in which the president is seeking a fourth non-consecutive term. The company provided the exchange rate used for calculations: 1 US dollar equals 5.1445 reais.
Implications
The board approval formalizes Petrobras' participation in the 30-day, 1.00 real per liter diesel subsidy and confirms that the payment structure can be layered onto the standing 1.12 reais per liter subsidy. The company has already received gasoline subsidy payments for specified sales dates, and cumulative fuel support reported by Petrobras stands at 9.9 billion reais.
Data and figures reiterated
- Diesel subsidy: 1.00 real per liter for 30 days, extendable by another 30 days.
- Existing diesel subsidy: 1.12 reais per liter (cumulative with the new support).
- Recent gasoline subsidy payment to Petrobras: 448 million reais for sales between July 16-31.
- Total accumulated subsidies for diesel, gasoline and LPG: 9.9 billion reais.
- Exchange rate noted by the company: $1 = 5.1445 reais.