Aug 30, 2011 - Brazil's government yesterday decided to reduce the percentage of anhydrous ethanol mixed to petrol (gasoline) to 20%, from the current 25%, as of October 1.
The decision was taken at a meeting between Brazil's president, Dilma Rousseff, and the ministers of Energy, Edison Lobao, Finance, Guido Mantega, Agriculture, Mendes Ribeiro Filho, and the Presidential Chief of Staff, Gleisi Hoffmann.
According to Lobao, the reduction is a precautionary measure amid the uncertainties related to the future sugar cane harvest.
"We have to guarantee the supply for this year and the next. Next year's crop is not expected to be much better than this year's, thus we have to take steps immediately to guarantee the present and the future", he noted.
According to the minister, the decreased ethanol blend will be valid for an undetermined period.
In the next days, the ministry of Finance is expected to announce measures favouring the sector. The government has recently said that it will support the production and storage of ethanol and provide funds to Petrobras Biocombustivel, the biofuel arm of Brazil's federal oil and gas giant Petrobras (SAO:PETR3; NYSE:PBR).
Last year, Brazil's government axed the ethanol percentage to 20% from 25% for three months, because of the increased ethanol prices and problems with the supply in some states.
In the beginning of this month, the Brazilian Sugarcane Industry Association (UNICA) again revised downwards its estimate for the 2011/2012 ethanol production of Brazil's Centre-South, which is the largest sugar cane producing region. UNICA cut by 6.83% the volume of its July estimate, which was already a downward revision compared to March's projection. Thus, the ethanol output is now seen to total 21 billion litres (5.548 billion gallons) in the current crop year, down 17.25% from 2010/2011.
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