Brazilian oil regulator ANP has adopted a new diesel subsidy methodology for the remainder of 2018 after changing its policy in May to bring an end to a truckers' strike.
The changes published in the official gazette this week and effective as of 31 August through the end of the current policy on 31 December include: the adoption of Argus Delivery South America ULSD as the reference to calculate the import parity at the Itaqui, Suape, Santos and Paranaguá ports; the inclusion of port terminal handling and storage costs; consideration of the internal logistics costs for delivery in each region of the country; and separation of Southeast and Midwest regionalized bases.
President Michel Temer in May offered a R0.46/l diesel prices freeze for an initial period of 60 days, later extended through year-end, to end a independent truck driver strike that snarled fuel and food supplies.
Around R0.16/l ($0.04/l) of the price freeze is from a reduction in federal fuel taxes, the remaining R0.30/l from a subsidy expected to cost the government around R9.5bn through year-end.
The ANP is responsible for managing the subsidy policy, including payments to companies participating in the program.
Importers have complained that the policy puts them at a disadvantage compared with state-controlled Petrobras. Fuel importers have been unexpectedly drawn back to the market recently following a 20 August blast at Petrobras' 415,000 b/d Paulinia (Replan) refinery.
The refinery has been idle since the explosion, but is expected to start partial operations later this week, pending ANP approval.
The loss of around 184,000 b/d of diesel production from the Sao Paulo refinery has prompted more diesel importers to ratchet up delivery after a softening following the government's adoption of the subsidy program.
