Brazil’s Lula to detach local fuel prices from global oil quotes if elected

BRASILIA: Brazilian former President Luiz Inacio Lula da Silva, a leftist polling ahead of incumbent President Jair Bolsonaro prior to this year’s general election, said on Thursday he does not expect to keep local fuel prices linked to global oil prices if he wins.

State-run oil company Petrobras currently sells its fuel based on the import parity prices, taking into account international prices for products such as gasoline and diesel and the foreign exchange rate. Lula implied that would change if he is elected.

“We are not going to keep the price in US dollars. I think that shareholders in New York and Brazil are entitled to get dividends when Petrobras makes a profit, but it is important for us to know that Petrobras also has to take care of the Brazilian people,” Lula said during a radio interview.

“I cannot make an American shareholder richer and impoverish a local housewife that will pay more for a bag of beans because gasoline prices have gone up.”

Brazil has been struggling with double-digit annual inflation driven mainly by energy and food prices, which has also hurt Bolsonaro’s popularity and led the central bank to kick off the world’s most aggressive interest rate hiking cycle.

Lula said the current administration has been showing an inability to change prices that are ultimately controlled by the state.

“Today, almost 40% of the inflation comes from government-controlled prices, because it is the government that controls energy, oil, gas, diesel prices. If the government has the courage to do so, it can reduce the prices a bit”, he said.