| BRASILIA, June 18
BRASILIA, June 18 The Brazilian government plans
to conduct tests over the next two months on the use of a higher
percentage of ethanol in commercial gasoline, a government
source told Reuters on Wednesday.
The test period will be used to determine the viability of
increasing the mandatory blend of the biofuel in gasoline at the
pump, the source said, adding that the trial will begin "as soon
Brazil is currently blending ethanol into gasoline at the
maximum of 25 percent. The source did not stipulate what higher
blends were being tested but the cane industry is seeking a
27.5-percent maximum and lawmakers in Congress recently pushed
unsuccessfully for a 30-percent blend ceiling.
Raising the blend requirement would favor the Brazilian cane
industry, the world's largest, as well as state-run oil company
Petroleo Brasileiro SA, but the measure has faced
government resistance in the past due to fears that a greater
demand for sugarcane could spur inflation.
The local automotive industry also came out against the
increase in the blend saying it would hurt motor performance.
Brazil's government decided to increase the amount of
biodiesel, mostly made from soy oil, used in diesel fuel to 6
percent from the current 5 percent starting in July. A second
increase to 7 percent is scheduled for November.
Debt-ridden Petrobras would benefit from a higher ethanol
blend requirement because it would enable it to reduce the
amount of gasoline it imports and sells at a loss in the
President Dilma Rousseff's government strictly controls fuel
prices as a means to control inflation, and her Finance Minister
Guido Mantega is on Petrobras' board.
Despite support for the increased blend from the
agriculture, environmental, energy and trade ministries as well
as the oil and gas regulator ANP, Mantega has so far opposed the
increase in the blend.
(Writing by Caroline Stauffer; Editing by Nick Zieminski)