Fuel distribution associations mostly in favor of a new trading model
Tax evasion was considered the main issue to be solved
Santos — Brazilian biodiesel industry participants differed Nov. 17 over a proposed revised domestic trading model.
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In a panel discussion at the annual Biodiesel BR conference, representatives from the Brazilian Institute of Petroleum, Brasilcom, Grupo Potencial and the Ministry of Mines and Energy’s fuel department, discussed the proposed trading model.
In the proposal released on Sept. 16 by the ministry’s Abastece Brasil (Supplying Brazil) commission, Brazilian fuel distributors would be able to buy 20% of their total biodiesel demand in the spot market, while 80% of the volume supplied would need to be “social fuel” produced by small-scale farmers, allowing spot market purchases and imports.
The commission proposed a shift from an auction to a partial open market as of Jan. 1, 2022.
Carlos Hammerrschmidt, Grupo Potencial director, was not in favor of ending Brazil’s current auction model, suggesting that shifting to an open trading model could increase tax evasion and price volatility of B100 for distributors and consumers.
“The record auction prices in 2020 did not reflect the standard conditions,” Hammerrschmidt said, referring to the lack of fuel demand predictability triggered by the coronavirus pandemic in Brazil.
Valéria Lima, IBP executive director, disagreed, saying an open trading model could be organized and in compliance with legislation and taxes.
“ANP as a regulatory company has an obligation to supervise the market agents,” said Lima, referring to the Brazilian National Agency of Petroleum, Gas and Biofuels.
The Mines and Energy Ministry’s Marisa Barros said the ministry always works to clamp down on tax evasion and dealing with this under a new biodiesel trading model would not be a new effort.
Carlos Germano, Brasilcom’s director, added that it is necessary to find a balance between an open and auction model in the next 12 months, to guarantee that any new model do not bring losses but just benefits.
Panelists said the proposed model was too similar to the anhydrous ethanol model, which according to the distributor’s members, was not attending the current market dynamics anymore.
Tax evasion costs the government Real 7 billion ($1.30 billion) annually, according to Germano.
The parameters for the biodiesel supply contracts will need to be previously approved by the National Agency for Petroleum, Biofuel and Gas regulatory agency.
According to Abastece Brasil, the parameters for biodiesel contracts are expected to be similar to anhydrous ethanol contracts.