Brasil seen to import ethanol, petrol in next four years

Aug 9, 2011 - Brazil will have to be an importer of ethanol and petrol (gasoline) in the next four years mainly due to the fixed price of petrol in the country, the director of the Brazilian Infrastructure Centre (CBIE), Adriano Pires, said yesterday.

The fixed price of petrol, aimed at containing inflation, is also causing Brazilian federal oil and gas giant Petrobras (SAO:PETR3; NYSE:PBR) to lose BRL 0.30 (USD 0.18/EUR 0.13) with every litre of petrol it imports, Pires said. Thus, for the first half of 2011 alone, Petrobras' losses already stand at BRL 4 billion, he added.

In 2010, while Brazil's gross domestic product (GDP) grew 7%, petrol consumption in the country rose by 19%, Pires said. In the first half of 2011, while GDP grew 4%, petrol sales climbed 10%.

The price of petrol, fixed at BRL 1.05 per litre at the refinery since 2009, hinders competition with ethanol, Pires said. The artificially low price of petrol is acting as an impediment to the expansion and renewal of the plantations of sugar cane, the main raw material for the production of ethanol.

The costs of the ethanol sector have swollen 38% in five years and when those costs are passed on to the price of hydrous ethanol, it loses competitiveness in relation to petrol, Pires explained.

(BRL 1 = USD 0.615/EUR 0.432)

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