The scheme has received a call for the creation of a benchmark price ceiling for LPG distributors, writes Maria Frazatto
Brazil's "Gas for All" scheme that aims to spread LPG use to more low-income homes should reconsider the creation of a price ceiling for LPG distributors, LPG association Sindigas' president, Sergio Bandeira de Mello, says.
"The mechanism creates economic flaws that can lead to distributors withdrawing from the programme, especially in remote areas where most beneficiaries are located," he says. The bill, which underwent revisions in November, aims to extend LPG subsidies to nearly 21mn low-income households and prevent beneficiaries from using the financial benefit for other purposes. Instead, it might create a system to provide LPG cylinder vouchers to the families, with the government directly paying distributors.
Sindigas supports creating a benchmark price from weekly price surveys made by oil regulator ANP. The LPG sector also agrees that prices should be different among states, as long as there is no price ceiling. ANP — which will be responsible for capping the price — assures that it will follow market price trends and consider each individual state situation such as transportation costs, according to the mines and energy ministry's oil and gas secretary, Pietro Mendes.
The Gas for All scheme is meant to supersede the social assistance ministry's gas assistance programme, which gave the money equivalent to one 13kg cylinder directly to the beneficiaries. But the new programme can also facilitate reselling fraud. Brazil's low-income households spend about 70pc of their income on housing and groceries, according to think-tank Getulio Vargas Foundation researcher Carlos Ragazzo, meaning that the free LPG cylinder given to the families could be sold to supplement income.
