SAO PAULO, April 2 (Reuters) – Brazilian President Luiz
Inacio Lula da Silva said on Thursday the government will seek
to annul an auction at which state-run oil firm Petrobras
sold liquefied petroleum gas (LPG) at prices he
described as too high due to the war in Iran.
Fuel prices have become a major concern to the leftist president
as he seeks re-election this year. They also are a growing issue
for Petrobras as it tries to appease the government while also
complying with internal rules that mandate it to turn a profit
on fuel sales.
“People were aware of the government’s and Petrobras’
guidance: we will not raise LPG prices,” Lula said in an
interview with TV Record Bahia.
“But they held an auction against the wishes of Petrobras’
management, and we are going to annul that auction,” he added,
noting that premiums had reached around 100% over local
reference prices. Lula did not provide further details on that
auction.
Petrobras last month cancelled diesel and gasoline auctions
after premiums ranging from 1.80 to 2.00 reais per liter of
diesel over refinery prices emerged.
It then decided to supply the fuel through existing
contracts, meaning it would sell diesel at lower prices than if
it were auctioned off, sources told Reuters.
While Petrobras is a major gas and diesel producer, Brazil
still relies on imports, making it vulnerable to international
price fluctuations.
Since the U.S.-Israeli conflict with Iran began, Lula’s
government has announced a series of measures to lower prices
for consumers, including a tax on oil exports.
Petrobras did not immediately reply to a request for
comment.
(Reporting by Gabriel Araujo in Sao Paulo, Fabio Teixeira and
Marta Nogueira in Rio de Janeiro; Editing by Louise Heavens and
Paul Simao)