The Brazilian Government will not renew the expiring December inch subsidy for ethanol exports, to refill the empty public budgets. Today two informants from the local Government to the news service of Reuters communicated that.
The end of the subsidy is de facto as a tax increase perceived, because biodiesel is thus more expensive and Brazil can export more sugar and import more diesel.
The exemption for ethanol exports since the year 2103 and had reduced the diesel fuel for the consumer to approx. 3 cents per litre compared to the price of gasoline. You had intended with the ethanol subsidies to support at that time low sugar prices and to raise the competitive disadvantage of ethanol compared to the price of gasoline. To combat inflation in the country, the Government had kept the gasoline price artificially low.
Because the sugar industry in Brazil has recovered well since then and reaps good gains, the promotion was no longer required, so the informant. The ethanol producers but request to maintain the derogation, since ethanol is more environmentally friendly than fossil fuels.
Analysts say an end to the derogation shall ensure that in the coming year in Brazil more sugar, produced at the expense of ethanol. Sugar already currently provides a better value after the world market price for greatly increased due to a supply deficit.
