By JEFF FICK
RIO DE JANEIRO -- Brazil's government will allow state-run
energy giant Petroleo Brasileiro, or Petrobras, to raise
gasoline and diesel prices by 5% in October, local business
daily Valor Economico reported Friday.
The price increase comes amid slowing inflation and a
stabilization in the Brazilian real, Valor reported,
citing a source close to President Dilma Rousseff's
The real has strengthened recently to BRL2.20 to the dollar
after the Brazilian Central Bank announced a series of
currency-market interventions and amid expectations that the US
Federal Reserve will keep its easy-money policies in place for
longer than expected.
The increase would bring domestic fuel prices closer to
international benchmarks and help shore up Petrobras's finances
ahead of the important auction of an offshore oil field set for
next month. Petrobras is obligated to hold a 30% stake in the
field under new production-sharing agreements and will have to
pay at least $2 billion in a signing bonus for the field.
Petrobras sells gasoline at about a 30% discount to
international benchmark prices, with the government reluctant
to authorize higher prices for fear of stoking inflation. The
subsidized fuel sales have caused steep losses in Petrobras's
refining division and raised
concerns the company will be unable to carry out its plans to
invest $237 billion through 2017.
Petrobras and the president's office were not immediately
available to comment on the report.
Dow Jones Newswires