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Gasoline Market Chain
(*)Statistical Annual 2006 - Source: ANP - www.anp.gov.br
Gasoline
The Brazilian gasoline market is currently regulated by the National Petroleum Agency (NPA) and by Law 9.478/97. This law flexibilized the oil and natural gas sector’s monopoly, until then controlled by Petrobras, and decontrolled gasoline imports and producer prices in January 2002.
When the consumer fills his or her car’s tank up at a retail service station, he or she purchases grade “C” gasoline, a mixture of grade “A” gasoline and anhydrous alcohol. The rate of this mix is a fixed value, established by the Ministry of Agriculture, at the range of 20 to 25% in alcohol volume.
Grade “A” gasoline (alcohol-free) can be produced by Petrobras, by other refiners in Brazil, and by the private petrochemical plants; or it can be imported by companies that are authorized to do so by the National Petroleum Agency (NPA). Sold to the several distributors that operate in Brazil, grade “A” gasoline is then mixed with anhydrous alcohol, resulting in the grade “C” gasoline sold to the thousands of service stations throughout the country.
There are cases in which Petrobras does not participate in the product’s marketing chain, such as in the case of imported gasoline, or when it is produced by an agent other than Petrobras.
The price Petrobras practices when it markets grade “A” gasoline is divided in two parts: Petrobras’ product value and taxes. These taxes are both state (ICMS) and federal (CIDE, PIS/Cofins).
The price the consumer pays also includes the cost of purchasing the anhydrous alcohol – which is established freely by its producers, the alcohol mills – and the distributor and retailer (service station) costs and marketing margins.
One must keep in mind that Petrobras only controls a part of the final price the consumer pays: the price at its refineries, without taxes, alcohol, and distribution and retail margins (see the figure of the price at the pump).
When one understands how the gasoline price is formed – by several parcels – it is easy to understand that any change made to any one of them will influence the price the grade “C” gasoline consumer will pay at the pump, whether upwards or downwards. For example, in the end of August 2003, in the State of São Paulo, anhydrous alcohol went up about 6.45%.
So far as the taxes are concerned, the ICMS aliquot was changed in 2003, in a few states. Specifically in the State of Rio de Janeiro, the aliquot on gasoline went from 30% to 31% in January 2003.
Also considering the tax parcel, it is important to clarify that the ICMS tax substitution calculation base changes also have direct impact on fuel prices. In 19 states, the average weighted price for the final consumer (AWPFC) used to calculate the tax substitution ICMS is updated quarterly.
The NPA monitors the prices practiced by service stations all over the Country via weekly surveys. The results can be checked out at the Agency’s website (http://www.anp.gov.br).
More information is available via e-mail, at sac@petrobras.com.br, or by calling 0800 78 9001.
(*) This link goes to an address outside the Petrobras system. Petrobras is not responsible for the content or policies/practices of privacy of the web sites that we indicate.
1 The ICMS Vat tax includes the portion referring to Tax Substitution, which is the amount collected by Petrobras referring to distribution company sales to service stations, and the latter to the end user.
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