Brazil ethanol lobby pushes for fuel import ban

The ethanol lobby in Brazil's lower house of congress is proposing a bill to suspend imports of gasoline, diesel and ethanol for 90 days, after President Jair Bolsonaro rejected calls to raise the gasoline tax.

The bill would effectively reduce gasoline supply in order to boost hydrous ethanol demand, according to the proposal's author, congressman Arnaldo Jardim, who also leads the legislative agricultural caucus (FPA).

Ethanol imports into Brazil in April reached 144.4mn liters (30,275 b/d), down 37pc from a year earlier, according to the trade secretariat's import-export database comexstat. Of the 750mn l in ethanol imports over the January-April period, almost 90pc came from the US and the rest from Paraguay.

Jardim said the bill seeks to guarantee the survival of domestic biofuels industry and preserve jobs. Brazil has roughly 400 cane mills that produce sugar and ethanol, which represent 2pc of the country's GDP, he said.

Jardim highlighted this would be a temporary measure that would also help the domestic refining industry and preserve Brazil's hard currency reserves.

Industry leaders say Brazil's ethanol sector will collapse if demand for the biofuel does not recover soon.

The sector has been hit hard by the social isolation measures, aimed at checking the spread of Covid-19, and the oil price crash in March. The latter made the price of rival gasoline more competitive against ethanol at the pump.

Domestic ethanol sales by mills in the center-south region reached 1.7bn l April, down 30pc from the same period of 2019.

The proposal is likely to face fierce opposition from fuel importers, which have been supplying a growing share of domestic demand in recent years, complementing domestic supply from state-controlled Petrobras, which also imports some fuel.