It is R$ 2.12 per liter. That is what the Brazilian government is putting up to hold down the price of diesel, and the subsidy should stay in place for another 30 days, Planning and Budget Minister Bruno Moretti said on Thursday (24). On a 50-liter fill-up the subsidy adds up to R$ 106, relief that reaches truckers and freight companies and, further down the line, the transport costs built into food prices.
Moretti spoke to reporters in Brasília at a press conference laying out this year's budget execution projections. "We will take it to the president, but given the indicators, the trend is for us to keep [the subsidy]," he said. The final call depends on President Luiz Inácio Lula da Silva, and the announcement is expected by the end of this week, days before the first round of Brazil's presidential election, according to Folha de S.Paulo.
The calendar is tight. The provisional measure that provides R$ 1.12 of the R$ 2.12 total loses effect on Saturday (26), which would cut the benefit to less than half without an extension. The remaining R$ 1.00 was created in early September under a measure that lets the government adjust the subsidy's total amount, Folha reports.
What the subsidy is
A subvention, or subvenção, is public money used to offset part of a product's cost and keep the price paid by consumers down, in this case diesel, the fuel of the trucks that carry most of Brazil's cargo. A provisional measure, or MP, is a decree issued by the president with temporary force of law: if Congress does not approve it within 120 days, it lapses, which is what Folha says is set to happen on Saturday.
The cause is external. According to Reuters, the government still aims to withdraw the subsidy once the oil price shock caused by the war in the Middle East dissipates. Until then, the benefit remains a buffer against the rise in oil prices.
The bill for the public treasury is not small. Zeroing PIS/Cofins, two federal taxes charged on fuels, on hydrous ethanol and gasoline, a move announced in early September alongside the extra R$ 1.00 for diesel, should cost about R$ 2 billion a month, Folha reports. That works out to more than R$ 65 million a day.