Minister for Mines and Energy Edison Lobao said Wednesday the proportion of ethanol added to gasoline would be increased from 20% to 25% on May 1.
Speaking to reporters in Brasilia following a meeting with Finance Minister Guido Manteiga, he said the rise had been predicted to happen in June, but now will happen May 1.
The government reduced the amount of ethanol in gasoline from 25% to 20% in October 2011, when biofuel supplies were low and prices elevated. Demand for ethanol is expected to rise following an announcement Tuesday by state-controlled oil company Petroleo Brasileiro SA that it will raise gasoline prices by 6.6% at refineries beginning midnight Wednesday.
The increased amount of ethanol will be a boon for Petrobras, which during 2012 was forced to import gasoline as domestic demand outstripped its refinery capacity. The government's policy of fixing consumer fuel prices below global prices to crimp inflation risks meant that Petrobras was forced to sell imported gasoline at a loss, which contributed to the company's first loss in 13 years in the second quarter of 2012.
The director-general of the ANP (National Agency of Petroleum, Natural Gas and Biofuels), Magda Chambriard, said January 17 that the amount of ethanol in gasoline would rise from 20% to 25%, possibly between March and April, depending on the sugarcane harvest.
The sugarcane harvest is traditionally closed in April. Brazil is the world's second-biggest producer of ethanol after the US.
