Petrobras announced that the price of liquefied petroleum gas (LPG) for commercial and industrial clients has risen 11%, effective midnight Friday. The company said the increase does not affect the price of LPG sold in smaller containers for residential uses such as household cooking, which rose 15% on September first.
The increase in LPG for residential use was the first in Brazil in 12 years. Petrobras has repeatedly complained about the mismatch losses of having to pay in dollars for imported LPG and receive local Reais. The Rousseff and previously Lula da Silva administrations have implemented a policy of keeping fuel and power prices frozen, even if these meant huge losses for companies involved.
The increase comes as Brazil’s Real has plunged against the U.S. dollar, forcing up the price of imports. While Brazil has become an important oil producer in recent years, its refineries cannot produce enough LPG for domestic needs, forcing the country to import about a quarter of LPG needs.
A weaker Real forces up the price of LPG imports in local currency terms.
The price hike for the final consumer will be around 5%, said Petrobras. About 25% of the 7.4 million tons of LPG that Brazil uses every year is imported.