November 1, 2016 / 4:26 PM / 2 years ago

UPDATE 1-Petrobras to change LPG pricing to eliminate subsidies

(Adds details, CEO comments)

RIO DE JANEIRO, Nov 1 (Reuters) - Brazil’s state-controlled oil company Petróleo Brasileiro SA will make changes to its pricing for liquefied petroleum gas (LPG) with the aim of eliminating some indirect subsidies, Chief Executive Officer Pedro Parente said on Tuesday.

Parente said the company will start to charge higher prices to LPG distributors who use the company’s storage facilities, ending a policy of charging the same price for distributors who use their own storage.

“What we are doing is to allow the elimination of cross subsidies in LPG logistics, trying to stimulate investments in storage by distributors,” Parente told reporters after participating in an event in Rio.

Parente said that small increases in LPG prices in some parts of Brazil were due to the change in storage policy, but Petrobras had not increased the price of LPG for distributors using their own storage and did not plan to do so.

Millions of families in Brazil still use liquefied petroleum gas sold in cylinders for cooking, despite an increase recently in use of piped natural gas.

Petrobras said its changes in pricing will have very limited impact on consumers. The company estimated an average increase of 0.36 percent in the value of a 13-kg cylinder, currently sold for 55 reais ($17.07).

The oil company did not estimate the impact on the revenue in this business segment from the pricing change. ($1 = 3.222 Brazilian reais) (Reporting by Marta Camargo; Additional reporting and writing by Marcelo Teixeira; Editing by Marguerita Choy)

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