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Brazil diesel prices cut in effort to halt strike

26 May 2018

However, Petrobras CEP Pedro Parente said the decision to cut prices for 15 days and then start gradually bringing them back up to market levels had not been made under pressure from the government, but aimed to ease the pressure on the streets, where more than 200,000 truckers are protesting the price hikes resulting from higher global oil prices.

Eliseu Padilha, chief of staff for President Michel Temer, told reporters in Brasilia that several unions representing truck drivers agreed to suspend the strike to give all parties time to find a solution to rising fuel prices.

In the capital Brasília, the airport was allowing only planes to land that had enough fuel to take off again and schools were closed.

It was the first such meeting between the government and truckers since they began partially blocking roads in several states on Monday to protest surging diesel prices.

Sao Paulo city hall announced Wednesday night that approximately 40 percent of the city's public bus fleet will be removed from circulation on Thursday due to the truck driver's strike and the inability to re-fuel public transportation sites.

The Brazilian Association of Meat Industry Exporters said dozens of meatpacking plants were idling because of the strike, and 1,200 containers carrying beef for export were not being loaded on ships each day.

Many supermarkets have been unable to refill their shelves and some airports said they were running low on fuel. According to Rio de Janeiro's Fuel Retailers Union (Sindcomb), at least half of the gas stations in the city today will end their supply of gasoline, diesel and ethanol on Thursday. The association said stores on average have a 15-day supply of dry goods, but fresh food would run out or spoil before then. Brazil is one of the largest exporters of meat in the world.

Jorge Martins, owner of an orange distributor, said he hadn't had a shipment in days. "We can't pay anything. Our accounts are starting to be in the red because we have daily bills we have to pay".

Reuters quotes a knowledgeable source as saying the government has suggested that Petrobras cuts diesel prices by a tenth for 60 days.

Since the beginning of May, gasoline prices have gone up 13% at the refinery gate, and diesel prices have risen by 12%.

Finance Minister Eduardo Guardia said late on Tuesday that an agreement was reached with congressional leaders to eliminate a tax on diesel as soon as Congress approves a separate payroll tax increase that would compensate for the lost revenue.

Pedro Parente, the president of Petrobras, says that the measure is a sign of the company's "willingness to help", working as a timeframe for the government to negotiate with truck drivers.

The decision, ending years of government control over fuel prices, turned a profit at the company's downstream segment, nearly doubling the company's market value in the period.

"The government thinks truckers are illiterate and can't count", said Vicente Reis, who has been driving for 20 years.

Head of the Abcam truckers' association, José de Fonseca Lopes had said the strikes would end if the Senate approved the suspension Thursday. And now they want a 15-day freeze with (a reduction of) 10 percent.

Brazil diesel prices cut in effort to halt strike