By MARIO SERGIO LIMA
Brazil is delaying until at least 2015 an increase in the
ethanol portion used to blend with gasoline, a government
official with knowledge of the decision said.
The government will take at least 10 weeks to conclude
studies on whether to boost the amount of ethanol in the
gasoline mix to 27.5% from 25%, postponing potential relief
from subsidized fuel imports for Petrobras, the official
said, declining to be named because discussions are not
public. Brazil, which makes ethanol
out of sugar-cane,
doesnt have enough supply this year and must wait until
the next harvest to boost the blend, the official said.
Petrobras, as Brazils state-controlled oil producer is
known, has posted more than $40 billion in refining
operational losses since 2011 when it began subsidizing
imported fuel to meet government mandates. Having more ethanol
in the gasoline blend will
reduce Rio de Janeiro-based Petrobras needs for
imported fuels at a time of growing domestic consumption.
Petrobras rose 1.3% to close at $8.66 (19.56 reais) in Sao
Paulo trading, after earlier climbing as much as 3.2% to
$8.82 (19.92 reais).
Brazil may approve the ethanol increase to prompt millers to
boost the crop ahead of the next harvest, the official said.
The government is studying the subject, listening to
all the involved groups, but will only make a decision if it
is economically viable, Brazils energy ministry
said in an e-mailed response to Bloomberg.
The government in April 2013 boosted the proportion of
ethanol in the gasoline mix to 25% from 20%. Most Brazilians
cars have engines that run both on ethanol
or a mix with gasoline. A
further increase is opposed by carmakers and environment
al agencies who say it
will damage car engines and worsen air quality.