Distributors estimate that an increase in diesel reserves would cause price to rise

Increasing the reserve “cushion” of the S-10 diesel in Brazil could have a billionaire impact on the sector and increase the price at the pump at gas stations. The statement is from the body that represents the largest players in the sector in the country, the Brazilian Institute of Oil and Gas (IBP).

In the preliminary reading of the body’s technicians, distributors would play a race against importers to increase their stocks to comply with the rule and avoid fines and, as a consequence, would be a more expensive price at the end.

The proposal by the National Agency of Petroleum, Natural Gas and Biofuels (ANP) provides for an increase in S-10 diesel oil stocks from 3 to 5 days to the equivalent of 9 days of commercialization.

The measure would go into effect on September 1st and would last until the end of November, but it still goes to public consultation, which should last five working days, in addition to a public hearing. The rule would apply to large refineries and distributors.

“This means an increase in cost, because you will have to mobilize. You have to build this stock, so there will be a rush to buy this product, a product that is already scarce in the international market. This raises the price in the market as well, because companies will have to comply with the determination if it is approved”, he told the CNN the executive director of downstream at IBP, Valéria Amoroso Lima.

“We hope to be able to convince the ANP to cancel this in the public consultation”, he adds.

The allegation for the increase in this reserve mattress is geopolitical issues, with warnings of possible shortages of diesel in various parts of the world. The measure would be applied to those who have a share greater than or equal to 8% of the market, which includes Petrobras, with the refineries, and the distributors Ipiranga, Vibra and Raizen. The four companies are members of the IBP.

At the meeting held on Thursday afternoon (30), the directors defended the changes in the rule. In the votes, they highlighted that it is a “peculiar”, “unique” moment, with a “very complicated global scenario” and that it is necessary to have a “sense of urgency”.

“We want there to be no limitation [para o abastecimento nacional]. However, given the various uncertainties that are publicly put here and our interpretation, and taking into account our competence, I am sure and convinced that this measure is clearly imperative”, defended director Daniel Maia Vieira.

The IBP questions the ANP’s discourse. “We don’t see a risk of shortages that justifies this increase in the imposition of agents. The agents they have been working with, they have been going to the international market, they are helping to fill the diesel deficit in Brazil, why does the regulator want to put an extra levy on them? It makes no sense,” says Valeria.