UPDATE 1-Brazil to hike fuel prices despite drop in oil abroad -source
(Recasts with government decision to maintain fuel price hike)
By Luciana Otoni
BRASILIA Oct 14 (Reuters) - Brazil will maintain plans to raise domestic fuel prices this year, despite a sharp drop in international crude oil prices, to help debt-laden state-run oil company Petrobras, a government source said on Tuesday.
The price of gasoline on the international market has slipped below the domestic price of the fuel in Brazil, Credit Suisse said in a report earlier on Tuesday, a situation that should ease losses on imports at the refining division of Petrobras.
The government will adjust prices to help Petrobras make up for losses that stem from government policies that had forced the company to sell fuel to local consumers at prices below international ones, the source said.
"Petrobras had to carry that price burden for some time and that was considered in the decision," said the official, who asked for anonymity to speak freely.
A finance ministry spokesperson did not immediately respond to requests for comment.
Unable to meet all domestic fuel needs from a dozen local refineries, Petrobras has had to make up the rest with imports. The government, though, has not allowed Petrobras to raise domestic fuel prices in line with international prices, forcing the company to sell the imports at home at a loss.
On Monday, however, the international price of gasoline was 1 percent below the Brazilian domestic price, the Swiss investment bank's Sao Paulo-based Brazil Economics Team said in a note to investors. Continuación...