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Petrobras, Brazil’s state-run oil company, will raise petrol prices for the first time in nine years next week in a bid to win back investors after government fuel policies eroded profits.
The Rio de Janeiro-based group said late on Friday it would increase the wholesale price of gasoline by 7.83 per cent and that of diesel by 3.94 per cent at refineries from June 25, forcing the government to cut fuel taxes to prevent the extra cost being passed on to consumers.
Shortly after the company’s statement to Brazil’s securities regulator, the country’s finance ministry announced that it would cut to zero the so-called Cide tax on fuel in what it said was an effort to “neutralise” the price increase.
“As such, the prices including taxes, which are charged by distributors and paid by consumers will not be raised,” the ministry said in a statement.
In spite of making one of the world’s biggest offshore oil discoveries in 2007, Petrobras has fallen out of favour with investors following high costs and falling profits, leaving its shares worth less than they were before the so-called “pre-salt” finds five years ago.
Government policies to contain inflation in Brazil have prevented Petrobras from raising prices, stopping the company from benefiting from high global oil prices and even forcing it to import fuel at a loss to feed growing domestic demand.
However, the government has come under pressure to ease restraints on its biggest company, especially as Petrobras needs all the capital it can get to pay for its $237bn five-year investment plan that will help turn Brazil’s huge oil resources into revenue.
Petrobras’s shares have risen over 5 per cent this week to about R$19.55 on speculation the authorities would sanction fuel prices increases.