The subsidy should boost LPG demand, but domestic distributors must work to balance prices across the country, writes Giovann Rosales
Brazil expects to launch its new LPG clean cooking subsidy scheme that aims to connect more than 15mn low-income families to the fuel this month, bringing the total to more than 46mn.
The government announced the programme, which has been called both the "Gas for All" and "People's Gas" scheme, in August last year as part of efforts to combat energy poverty and transition low-income households away from firewood for cooking. Beneficiaries will receive funds to cover the cost of one 13kg cylinder of LPG every two months. The scheme was intended to begin in January but was held up by the bill passing through congress.
The 15mn families will receive a voucher that they can redeem through a registered LPG distributor, government cabinet chief of staff Rui Costa said on 26 August. Qualifying homes must have a per capita income no more than half of the minimum wage of 759 reals/month. The scheme is expected to replace the older Auxilio Gas programme, which already disburses funds to 5.6mn homes every two months, bringing the total due to receive subsidies to about 21mn. The new scheme will also tackle the problem of "leakage", as Auxilio Gas beneficiaries often use their grants to buy food and other items, whereas they will now receive vouchers that can only be used to buy LPG, market participants say.
This is expected to significantly boost domestic LPG demand, particularly in northeast Brazil where more low-income families live in off-grid areas. Consumption in the country stood at around 7.8mn t in 2024, with 5.2mn t of this coming from the residential sector, Argus data show. But local distributors still need to work with the government to balance retail prices, with a national average of R105-109 ($19-20) and some prices as high as R160-170, Costa said.
State-owned Petrobras announced last month that it is considering returning to domestic distribution, a move that may help narrow the price disparities. Petrobras exited the downstream LPG sector when it sold subsidiary Liquigas in 2020.
The government will be forced to make cuts to other social benefits to fund the new LPG subsidy scheme. An allocation of R600mn in 2025 under the federal budget would only cover two months and the 5.6mn homes under the Auxilio Gas scheme. An agreement between the government and budget rapporteur in congress earlier this year secured funding for the whole of 2025, excluding the expansion, with cuts made to other benefit programmes.
Brazil is preparing for a jump in demand through two new import terminals. Antitrust watchdog Cade recently approved LPG distributors Ultragaz and Supergasbras' joint plan to develop a new terminal in Ceara state, northeast Brazil. This will be able to store 62,000t and is scheduled to open in 2028. And a consortium including distributors Copa Energia and Supergasbras is aiming to build a terminal in Suape, also in northeast Brazil, that can store 71,000t and could be operational in 2027.
