Sao Paulo state quarterly gas distribution tariffs were adjusted by regional regulator Arsesp, following quarterly gas price cuts from state-controlled Petrobras.
Arsesp's cuts for industrial consumers range from 3.1-11.6pc, depending on demand thresholds, following Petrobras reducing gas prices by an average of 8.1pc for May-July on 17 April. Gas supply agreements between Petrobras and gas distributors are updated quarterly to reflect variations in exchange rates and indexation benchmarks in contracts.
Sao Paulo distributors charge tariffs based on consumption levels, with more demand holding smaller tariffs. That leads to tariff reductions benefiting larger consumers more than those with smaller demand.
Tariffs are calculated through a formula with a fixed term added to a variable term, both dependent on gas volumes. The tariffs also cascade through volumes, meaning each threshold is charged according to its own fixed and variable terms to result in a company's final charge.
Tariff reductions and Petrobras' natural gas prices differ because the tariff includes other items, such as taxes and the distribution margin, which pay distributors for their investments in pipelines. There is also a component accounting for the differences between the physical gas price in tariffs and what is effectively paid by the consumer to the supplier.
The steepest decreases came from northwestern Sao Paulo distributor Gas Brasiliano, with tariffs falling from 7.9-11.5pc for industrial consumers. In the lowest threshold, of gas consumption up to 3,000 m³/month, the fixed term remained at R357.47 ($74.31), while the variable term decreased to R4.811054/m³ from R5.226361/m³. In the highest threshold, for natural gas consumption above 1mn m³/month, the fixed term remained at R17,083.02, while the variable term decreased to R3.169502/m³ from R3.584809/m³.
Southeastern Sao Paulo distributor Naturgy had the smallest decreases in the industrial sector, ranging from a 3.25pc increase in its lowest consumers threshold to a 5.1pc decrease for larger consumers. The distributor increased all of its fixed terms by 12pc.
In its lowest threshold, of up to 5,000m³/month, the fixed term reached R503.08, up from R447.35, while the variable term increased to R6.097661/m³ from R5.905824/m³. In the highest threshold, for natural gas consumption above 3mn m³/month, the fixed term was up to R184,771.18, while the variable term decreased to R2.944306/m³ from R3.101799/m³. Naturgy also increased tariffs for free market consumers in all levels of consumption.
Sao Paulo state capital and metropolitan area distributor Comgas is in between the two other companies, with decreases for industrial consumers ranging between 5.6-7.9pc. In the lowest threshold, of gas consumption up to 50,000 m³/month, the fixed term remained at R315.84, while the variable term decreased to R3.875302/m³ from R4.104158/m³. In the highest threshold, for natural gas consumption above 2mn m³/month, the fixed term remained at R258,232.52, while the variable term decreased to R2.658216/m³ from R2.887072/m³.
Brazil liberalized its natural gas market allowing for industrial consumers to buy gas directly from gas suppliers and pay distributors only for using the grid. But fewer than five companies in the whole country trimmed their gas purchases from the distributors to buy part of their gas demand directly from producers.
Robust penalties for not meeting the minimum gas intake in one given day hold back liquidity in the free market. Several industrial gas consumers told Argus that the current contracts for gas distribution do not allow companies to manage variation demand risks.
