Brazil fuel distributors under regulatory scrutiny

Brazil's oil regulator ANP has given fuel distributors 15 days to submit price formation data, heightening government pressure on distributors in a long-running dispute.

The request published today appears to be focused on gasoline prices, which the ANP says have not fallen in response to refinery gate price cuts by state-controlled Petrobras.

The agency says a recent drop in wholesale gasoline prices to an average of R1.676/l ($0.43/l) from around R2.1381/l in mid-September only resulted in a pump price reduction of R0.04/l.

Distributors claim gasoline prices do not directly track Petrobras' prices because of blending requirements, marketing expenses and the general difficulty of keeping pace with the company's price changes. Sector representatives say higher gasoline prices reflect fuel taxes and not collusion, as the government claims.

The government has been pressing to investigate alleged cartelization among the country's biggest distributors, including Petrobras distribution arm BR, Ipiranga and Raizen, a joint venture between Cosan and Shell.

President-elect Jair Bolsonaro, who takes over from sitting president Michel Temer on 1 January, regularly blasted fuel price levels on the campaign trail.

The ANP says today's request is another facet of a transparency campaign launched in the wake of a late May truck drivers´ strike that snarled food and fuel supplies throughout the country. At the time, the agency resisted calls for limiting the frequency of wholesale price adjustments and instead put the onus on producers and importers to regularly disclose price calculations.

Petrobras and other fuel importers have blasted the proposals that have gained favor among fuel retailers´ groups and consumer advocates.

Earlier this month, the ANP started publishing weekly import prices for diesel, gasoline, jet fuel and LPG at the country's five major ports: Itaqui, Suape, Aratu, Santos and Paranaguá.

Petrobras has already implemented a hedge that allows the company to maintain gasoline prices below import parity for up to 15 days. A similar mechanism is likely to be applied to diesel once a diesel price subsidy ends on 31 December.