By Michael Place?/?Business News Americas
Companies / Entities
An expected 7% rise in gasoline prices will save Brazil's state-run oil company Petrobras (NYSE: PBR) 600mn reais (US$294mn) a month, according to Rio de Janeiro energy consultancy Centro Brasileiro de Infraestrutura (CBIE).
The federal government is set to raise gasoline prices for the first time in almost 10 years next week, local daily Estado de S Paulo reported on Tuesday.
In addition to the gasoline hike, diesel prices are expected to jump 4-5%.
It will bring to an end the government's decade-old policy of subsidizing fuel prices in a bid to curb inflation.
According to CBIE chief executive Adriano Pires, the government will attempt to avoid inflationary pressure by raising the percentage of ethanol in the fuel admixture from 20% to 25%.
The discrepancy between what Petrobras pays for fuel imports and revenue gained from domestic sales is forecast to fall from 15.9% to about 8% as a result of the measure.
"But the impact on diesel will be very modest because the current discrepancy is more than 23%," Pires said.
Analysts say the government's fixed-price strategy is largely to blame for Petrobras' poor financial performance in 2012. The company reported a 12% year-on-year decline in third quarter profit to 5.57bn reais.
Why settle for this one story when you can access all our news? Sign up here for your free 15-day trial.