Brazil Economy Ministry pushes Petrobras not to pass on import costs -sources

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A worker uses a petrol pump at a Brazilian oil company Petrobras gas station in Brasilia, Brazil March 7, 2022. REUTERS/Adriano Machado

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BRASILIA, March 10 (Reuters) - Brazil's Economy Ministry has argued that state-run oil company Petrobras should remove import-related costs from its fuel price calculation, two ministry sources told Reuters, as part of a debate about how to address soaring energy costs.

The sources, who spoke on condition of anonymity because the discussions are private, said any change would come down to a decision by Petrobras. But they flagged the issue was part of a close analysis by the government's antitrust agency CADE, which opened an investigation in January into conduct by Petrobras.

The sources stressed that the ministry has no formal role in fuel pricing at Petrobras, but is following the matter closely.

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The pricing policy at Petrobras has come under intense public criticism, including from President Jair Bolsonaro, after soaring oil prices following Ukraine's invasion of Russia added to pressure on double-digit inflation in Brazil. read more

Despite backing a Petrobras policy of tracking global markets with its domestic fuel prices, one of the sources said the ministry has questioned why the company incorporates costs linked to imports, including freight and insurance.

"What happened to the cost of shipping during the pandemic? It jumped. Petrobras adds all that cost and puts it in there," said the source.

A third Economy Ministry source said Petrobras includes import costs in its calculation because it currently imports refined petroleum derivatives, adding that removing the expense would not have a significant impact on prices.

The Economy Ministry declined to comment.

On January 12, CADE launched an administrative inquiry to investigate possible anti-competitive practices by Petrobras.

Petrobras told Reuters it uses the import parity price as a reference since it is "an indicator of the market value for fuels in Brazil, as the country is a net importer of these products."

The company announced it will raise fuel prices at the refinery gate starting Friday, in a welcome respite for investors concerned about the growing discount that it has been offering to domestic consumers. read more

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Reporting by Bernardo Caram Writing by Marcela Ayres Editing by Brad Haynes and David Gregorio

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