Fuel sales set to rise in 2004

Led by sales of alcohol, diesel and vehicular natural gas (VNG), Brazilian fuel sales are expected to rise in 2004 on economic growth of 3.5-4%, newspaper Valor Economico quoted Paulo Borgeth, VP of fuels distributors' union Sindicom, as saying. Diesel sales are expected to increase because of the recent growth in agricultural transport, while gas sales should follow suit due to cheaper prices and the rising number of gas-fuelled vehicles, the paper reported. Gasoline sales are not expected to rise as much because of recent declines in consumer spending power. Alcohol sales should lead the rebound by growing 4-5%, specifically because of an ICMS tax reduction of 13 percentage points to 12% in Sao Paulo state, the paper quoted the president of the BR Distribuidora retail unit of federal energy company Petrobras, Rodolfo Landim, as saying. Sales of diesel and VNG should increase 3.5-4%, while gasoline sales should rise 2.5-3%. However, sales of fuel oil should decrease 3-5% as it is replaced by natural gas. BR expects oil derivative prices to remain constant at refineries due to the expected stability in international oil prices, but retail prices should rise as taxes increase, Valor Economico reported. Consulting firm Tendencias projected a 9.5% increase in the price of gasoline and 10% in that of liquefied petroleum gas (LPG) throughout the year, newspaper O Estado de S.Paulo reported. While the rise in gasoline prices is expected due to a 10% increase in the federal Cide tax projected in the federal budget, LPG prices are seen as increasing as a result of changes in ICMS tax legislation in 11 states, the newspaper said. Gasoline sales reportedly fell by 6.67% in 2003, diesel sales by 5.36% and LPG sales by 8.33%, while VNG sales increased 25%.