Marcela Ayres and Marcelo Teixeira (Reuters) The Brazilian government on Tuesday paved the way for ethanol makers to sell the fuel directly to gas stations, by passing a resolution to boost fuel industry competition, although additional legislation is required to bypass fuel distributors.
The resolution by CNPE, the energy policy council, includes the option for direct sales by mills. Brazil’s Economy Ministry would have to issue tax-related regulation within 180 days for the change to take effect.
Some groups representing sugar and ethanol mills had argued for the change for years, saying it would lower prices for consumers and increase profit margins for producers.
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Advocacy of direct sales is not unanimous in the ethanol industry. Brazil’s largest ethanol association, Unica, argues that it could complicate the rollout of a national program to boost biofuel use, RenovaBio, which is scheduled to start next year.
RenovaBio will give fuel distributors targets to cut carbon emissions linked to the amount of biofuels they use. If mills sell ethanol directly, distributors may struggle to increase volumes of ethanol.
The move has also raised questions about taxation. Mills and distributors share payment of the federal PIS/Cofins tax on ethanol. Mills might have to pay that tax in full if they sell directly to gas stations. READ MORE