Brazil launches measures to cushion fuel price hikes

Alsharq Tribune-Ahmed Essam 

Brazilian President Luiz Inacio Lula da Silva on Monday launched a package of measures designed to cushion the impact of international energy price volatility on Brazil's economy.

The president signed a series of decrees to provide immediate relief to consumers and businesses, while strengthening the country's energy security and reducing Brazil's exposure to external shocks.

A major part of the package was a diesel subsidy, crucial for freight transport in the country. The federal government and the states will jointly finance the subsidy of 1.20 reals (0.23 U.S. dollars) per liter for diesel imports, with the federal government shouldering half of the subsidy.

For the renewable fuels sector, the government announced the exemption of two federal taxes on biodiesel, which will lead to a price reduction of 0.02 reals (0.004 dollars) per liter. Biodiesel represents 15 percent of the diesel blend sold in Brazil.

The package also includes measures for liquefied petroleum gas (LPG), widely used in Brazilian homes. The government will subsidize all LPG imports for the next few months, providing a subsidy of 850 reals (165 dollars) per ton.

The total estimated cost of this measure is 330 million reals (about 64 million dollars) and it will allow imported LPG to be sold at the same price as locally produced LPG, reducing the impact of international price increases on households, especially lower-income families.

The government also announced the creation of two credit lines for the aviation sector, totaling up to 9 billion reals (1.75 billion dollars).

Meanwhile, the government sent an urgent bill to Congress that criminalizes price gouging, with penalties ranging from two to five years in prison.