(Reuters) – New tax credit rules unveiled by Brazil’s government are expected to lead to a rise in gasoline and diesel prices in the country, an energy lobby said on Monday, estimating their impact on fuel distributors to reach 10 billion reais ($1.86 billion).
President Luiz Inacio Lula da Silva last week published an executive order with for the use of credits by companies related to the federal PIS-Cofins taxes, triggering a from the most affected industries.
As companies look to offset the impact of the measure, energy lobby IBP said gasoline prices may rise 4% to 7% for consumers, or up to 0.36 real per liter, while diesel prices were seen rising 1% to 4%, or as much as 0.23 real per liter.
The executive order, which takes effect immediately but needs legislative approval within four months to remain valid, “will burden several sectors of the economy” and “result in increased public transport and freight costs,” IBP said in a statement.
The group represents Brazil’s three largest fuel distributors – Vibra Energia, Grupo Ultra’s Ipiranga, and Raizen, a joint venture between Cosan and Shell .
Ipiranga has already informed its network of re-sellers about an increase in gasoline, ethanol and diesel prices starting this week because of the measure, according to an internal memo published by local media and confirmed by the firm’s press office.
“Ipiranga’s pricing policy is aligned with current parameters, in compliance with the sector’s standards,” the company said in a statement.
Vibra and Raizen declined to comment.
($1 = 5.3744 reais)
Brazil Energy Insight 
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