Brazil's senate okays direct ethanol sales to gas stations

Brazil's senate approved a decree Tuesday that allows ethanol producers to make direct sales to gas stations, which was previously forbidden by oil and gas regulator ANP.

A plenary session in the senate voted 47-2 to end the restriction. The bill now requires the approval of the lower house before it can go into force.

The debate began after the truck drivers' strike hit the country in May and resulted in a lack of fuel supplies. This measure was one of the initiatives proposed by antitrust body Cade after the strike to increase competition in the country's fuel market.

"We are creating an alternative for suppliers to buy ethanol both from distributors and straight from plants and distilleries, in order to increase competition in the fuel market and, consequently, reduce prices for final consumers," the bill states.

Plural, the national association of fuel distributors, is opposed to the change and claims that the end of the ban could lead to higher prices for consumers and will generate additional costs of 870mn reais (US$233mn) due to the lack of infrastructure allowing producers to distribute their ethanol to gas stations, in addition to losses in national tax revenues.

"The ethanol plants don't have the logistics required – which involve pipelines and railways – to reach the 40,000 gas stations all over the country. The complex current system was only made possible after years of investments and development under strong regulations that clearly defined the roles and responsibilities of each stakeholder," Plural said in a statement.