Petrobras, Brazil government mull fuel price cut to offset tax...

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Brazil's state-run oil giant Petrobras (PETR4.SA) and the federal government are considering the possibility of the firm reducing fuel prices as a way to offset the resumption of taxes levied on fuel, the finance ministry said on Tuesday.

The confirmation came after Reuters reported earlier in the day, citing sources familiar with the matter, that government officials and Petrobras executives had floated the possibility at a meeting a day earlier.

"It is one of the possibilities under discussion," the ministry said in a statement via its press office.

The finance ministry announced on Monday the government was set to resume this week the collection of federal taxes on fuels, ending a waiver set by former President Jair Bolsonaro last year.

According to the ministry, the rate on fossil fuels would be higher than that levied on biofuels, but the government would still recover 100 percent of tax revenues that had been waived since 2022.

As a way of offsetting the impact on consumers' pockets, the government and Petrobras opened discussions on the possibility of the company cutting its own prices.

According to two sources familiar with the matter, who asked not to be named, the parties saw room for the firm to reduce both gasoline and diesel prices as local rates have been higher than those in international markets.

"There is room for compensation within the import parity policy," one of the sources said, referring to Petrobras' official policy of tracking international rates such as global fuel prices and foreign exchange.

A meeting attended by a government official and Petrobras executives was held at the company's headquarters in Rio de Janeiro on Monday. The price cut is seen as a temporary solution for the very short term, one of the sources said.

In a securities filing after the report, Petrobras said that adjustments in product prices were made "in the normal course of business" and following its current commercial policies.

The company, formally known as Petroleo Brasileiro SA, reiterated it was committed to "competitive prices in balance with market".