Brazil Keeps Import Tariff on Ethanol at Least Until July

Ethanol and gasolineAs announced by the Brazilian minister of Agriculture, Reinhold Stephanes, the reduction of the import tariff on ethanol has been postponed until July. Upon leaving the meeting of the Foreign Trade Board (Camex), he informed that the tariff reduction has been removed from the guidelines and will only be discussed again in five months.

According to the minister, the beginning of the sugarcane crop, in March, would render an eventual reduction of the import tax ineffective. “If we were to eliminate the tariff now, nothing would change with regard to fuel prices, because the sugarcane crop is going to start and prices would drop anyway.”

Presently, ethanol pays a 20% import tariff in order to enter Brazil. According to Stephanes, the tariff’s elimination, which should occur in the second half, will have diplomatic objectives.

“We are going to scrap the tax in order to pressure the United States into not taxing our ethanol on their market,” said the minister.

The Brazilian minister of Development, Industry and Foreign Trade, Miguel Jorge, who presides the Camex’ Council of Ministers, stated that he supports the tax reduction, and that he believed it was going to be passed. He was wrong.

Brazilian president Luiz Inácio Lula da Silva and Petrobras president José Sérgio Gabrielli inaugurated recently the conversion of the Thermal-electric mill in Juiz de Fora, Minas Gerais, to operate with ethanol. According to information disclosed by Petrobras, it is the world’s first mill to operate with fuel alcohol.

According to the state-controlled oil company, the mill is now dual-fueled. That is, it can operate both with ethanol and with fossil fuels, as is the case with most of the vehicles produced in Brazil. It has been testing operation with alcohol since December 31st and has installed capacity of 87 megawatts.

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