Brazil: Petrobras approves new guidelines for fuel prices formation

On Wednesday, July 27, Petrobras‘ Board of Directors approved the Guideline for Pricing in the Domestic Market to be applied to oil products and natural gas sold in the domestic market, including the Board of Directors and the Fiscal Council in the supervision of the execution of the oil company’s pricing policies.

The directive incorporates an additional layer of supervision of executing the pricing policies by the Board of Directors and the Fiscal Council, based on quarterly reporting by the Executive Board, “formalizing an existing practice”.

The guideline, however, will not alter the company’s price balance policy with the national and international markets. “It is worth noting that this approval does not imply a change in the current pricing policies in the domestic market, aligned to international prices, nor in the company’s Bylaws,” informed the state-owned company.

“In the implementation of the Pricing Policies, seeking to maximize the generation of value for the Company, the Executive Board, or the authority delegated by it, should monitor the evolution of the Brazilian market for oil products [considering, for example, the effect of the sale of refining assets], of substitute products and the performance of importers, having as the main benchmark of competitive price the balance of Petrobras’ prices with the domestic and international markets and also observing the necessary market share for the optimization of its assets, as well as the preservation of a healthy competitive environment, under the terms of the Legislation in force,” explained Petrobras.

Although it adds the Administration and Fiscal Councils, the guideline reiterated the competence of the Executive Board in executing pricing policies to “preserve and prioritize the company’s economic result, in the direction of maximizing its value generation.”

“The procedures related to the execution of the price policy, such as the periodicity of the product price adjustments, the percentages and amounts of such adjustments, the convenience and opportunity concerning the decision of price adjustments remain under the competence of the Executive Board,” it noted.

Also, according to the guideline, “the Executive Board must report quarterly to the Board of Directors and the Fiscal Council the evolution of prices charged in the domestic market for diesel, gasoline, and LPG, as well as Petrobras’ participation in these markets.”

With information from Agência Brasil