Bills that would reduce fuel prices are ready for a vote.
There is no obstacle to voting on proposals next week, says senator.
Brazil Agency - Two proposals aimed at reducing fuel prices in the country are scheduled to be voted on in the Senate next week. Complementary Bill (PLP) 11/2020 and Bill (PL) 1.472/2021 were on the agenda last week, but were not voted on.
The PLP report was read and discussed, but the vote was ultimately postponed until after Carnival. After the holiday, the rapporteur for both projects, Jean Paul Prates (PT-RN), said he believes the vote will take place without further delays. The senator informed that he will be available for meetings on Monday and Tuesday afternoon.
“We can even postpone it to Wednesday, if necessary. I just think it can’t be pushed to next week,” the senator said, in a conversation with journalists this afternoon (4). In the previous session, senators from the government base and some considered independent asked for the discussion to be postponed, stating that they did not have full knowledge of the report.
Prates emphasized, however, that there are no longer any doubts or controversies regarding the text. One sign of this is that no one has approached him to present amendments to the projects after the postponement of the vote. “There wasn't a single point of disagreement that would make me change anything. None appeared. The tools are ready for voting. If any small additions appear, we will analyze and correct them.”
For Prates, the increase in oil barrel prices as a consequence of the war in Ukraine makes the debate even more urgent. Since 2016, Petrobras has adopted the so-called Import Parity Pricing Policy (PPI), which links the price of oil to the international market, using the price of Brent crude, calculated in dollars, as a reference. This means that the international value of oil and the dollar exchange rate directly influence the company's pricing structure.
“There’s no valid argument [for not voting]. You have to be very brave to go there, in the midst of the Ukraine crisis, with the price of oil at US$115, US$120 a barrel, and say: 'hold on, I still don’t know what the impact of this will be'. The price [of fuel] has been rising for a year, and you [from the government’s base] are saying you couldn’t do anything. We create the projects, process them, discuss them in committees, and then you come and say you’re not prepared? It’s a weak argument.”
The senator used the Carnival holiday to speak with Senate colleagues and governors, clarifying doubts about the two projects and, according to him, "combating some misinformation and unanswered fears."
Prates also defends keeping the dialogue open regarding the suggestions presented in plenary during the previous session. On that occasion, the rapporteur accepted proposals to enable the vote that day. The tendency is to reopen the debate on these proposals. “We are keeping it under discussion; it’s a valid legislative strategy. When they postponed it, I said: 'I will analyze all these things they brought to me during the holiday period.' I am considering it very much, but it is under discussion,” he added.
ICMS and gas subsidy
Bill 11/2020 proposes simplifying the Tax on the Circulation of Goods and Services (ICMS) throughout the country, establishing the so-called "single-phase" system, meaning the collection of the tax in only one phase of the production chain.
Currently, the ICMS tax on fuels varies from state to state and is calculated throughout the distribution chain based on an average price at the pump. The proposed law suggests that the tax have a fixed value in reais, per liter of fuel, instead of being charged as a percentage of the final price of the product.
The project also includes an increase in the value of the gas subsidy, revising the legislation that created it and expanding its target audience to 11 million families in 2022. This would double its target coverage compared to the amounts originally approved in the annual budget law. To finance the expansion, Prates estimates that it will be necessary to double the program's budget, adding another R$ 1,9 billion.
As a source for the expenses related to the gas subsidy, the rapporteur indicated the funds collected from the signature bonuses for the Sépia and Atapu pre-salt oil fields. Both fields were acquired in the second round of bidding for the surplus volumes of the onerous transfer of pre-salt reserves, in December of last year.
Stabilization Fund
Bill 1.472/2021, which creates the Stabilization Fund, aims to use its resources to prevent the effects of constant changes in the price of oil and other variables that affect the value of fuels from being felt directly at gas stations.
The bill establishes guidelines for pricing policy in the sale of fuels and petroleum derivatives, such as protecting consumer interests; reducing external vulnerability; encouraging the use of installed refinery capacity; moderating domestic prices; and reducing domestic price volatility.
The bill also stipulates that the prices of petroleum-derived fuels in the country should be based on average international market prices, domestic production costs, and import costs.
The author of the bill, Senator Rogério Carvalho (PT-SE), criticizes the current formula for calculating fuel prices, based on International Price Parity. According to Rogério Carvalho, the adoption of PPI has consequences for the entire economy and harms the most vulnerable population. The senator said that this is what motivated him to present a bill to debate Petrobras' pricing policy.
One of the senator's arguments is that Petrobras reduced its refining capacity in order to increase the presence of private initiative in the sector, hence the calculation of the value based on the PPI (Partnership for Investment in Petroleum Products). He further argues that "the PPI results in extraordinary gains for Petrobras, and the ultimate goal would be to sell its refineries."
The text also created an export tax on crude oil starting at US$40 per barrel, but the rapporteur encountered significant resistance from colleagues and removed the export tax from the text to facilitate the bill's approval.
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