Brazil's government will allow state-run energy giant Petroleo Brasileiro (PBR, PETR4.BR), or Petrobras, to raise gasoline and diesel prices by 5% in October, local business daily Valor Economico reported Friday.
Brazil
's
government will allow state-run energy giant Petroleo Brasileiro (PBR,
PETR4.BR), 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 office. 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 U.S. 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.
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