Rousseff gives go-ahead to Brazil fuel price formula, Estado says

SAO PAULO Sat Nov 2, 2013 9:25am EDT

Brazil's President Dilma Rousseff (C) speaks to the media after a ceremony for the new law, the Programa Mais Medicos (Program More Doctors), at the Planalto Palace in Brasilia October 22, 2013. REUTERS/Ueslei Marcelino

Brazil's President Dilma Rousseff (C) speaks to the media after a ceremony for the new law, the Programa Mais Medicos (Program More Doctors), at the Planalto Palace in Brasilia October 22, 2013.

Credit: Reuters/Ueslei Marcelino

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SAO PAULO (Reuters) - Brazilian President Dilma Rousseff will allow state-run oil company Petróleo Brasileiro SA to increase domestic fuel prices "two or three times" a year through the use of a formula without triggering significant consumer price gains, newspaper O Estado de S. Paulo said on Saturday.

According to Estado, which cited an unidentified presidential aide as the source for the information, Rousseff's endorsement of the plan aims to ensure that the company, commonly known as Petrobras, has a predictable business plan for the years ahead.

Petrobras said this week that its new policy to set domestic diesel and gasoline prices will automatically trigger adjustments based on international prices, exchange rates and other factors. The methodology will not allow full pass-through of volatility of international oil prices, Petrobras said.

A presidential palace spokeswoman declined to comment on the Estado report. Calls to mining and energy ministry media officials were not immediately answered.

The new formula, once it is in place, will help Petrobras smooth out short-term gaps between international and domestic fuel prices that have triggered more than $10 billion in losses at its refining division over the past couple of years.

The plan is expected to help Petrobras, ranked by some analysts as the world's most indebted company, to cut debt that has ballooned because of a government-mandated policy that the company sell imported fuel at a loss to keep local prices low.

(Reporting by Guillermo Parra-Bernal; Editing by Vicki Allen)

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