Petrobras (PETR3;PETR4) reported on Tuesday (16) that its board of directors the day before approved a new business strategy for setting diesel and gasoline prices at the state-owned company, intended to replace the current pricing policy for gasoline and diesel sold by its refineries, PPI (or Import Parity Policy ).
The new strategy leverages market references such as: the customer’s alternative cost as a value to prioritize in pricing; and the limit for Petrobras.
In a key fact filed with the Securities and Exchange Commission (CVM), the state-owned company explains that the customer’s alternative costs include the main supply alternatives, whether they are suppliers of the same products or substitute products, while the limit for Petrobras is based on the opportunity costs given the various alternatives available to the company, including production, import and export of said product and/or oils used in refining.
According to Petrobras, “adjustments will continue to be made without a specified periodicity to avoid cyclical volatility in international quotations and the exchange rate being passed through to internal prices”. In addition, decisions related to business strategy remain subject to the Market and Price Executive Group, consisting of the Company’s President, General Manager for Logistics, Commercialization and Markets, and Director for Finance and Investor Relations.
The business strategy is in line with the domestic market pricing policy approved by the Board of Directors on July 27, 2022 and is based on the premise of competitive pricing per outlet in balance with domestic and international markets while considering the best alternative accessible to customers, the company says.
“This strategy allows Petrobras to compete more efficiently considering its market share, optimizing its refining assets and profitability in a sustainable way,” says the state-owned company, adding that it will have more flexibility in enforcing competitive prices. Taking advantage of better production and logistics conditions and competing for the market with other players who sell fuel in Brazil, such as distributors and importers.
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The relevant fact also states that competitive pricing maintains a price level that ensures the realization of the investments envisaged in the strategic plan on the premise of maintaining the company’s financial sustainability.
“Petrobras is increasing its commitment to value creation and long-term financial sustainability, keeping its performance in balance with the market,” the oil company adds.
Check out the full statement:
Petróleo Brasileiro SA – Petrobras announces that its Board of Directors (DE) yesterday, May 15, 2023, approved the commercial strategy for setting diesel prices and petrol from Petrobras, replacing the pricing policy for petrol and diesel sold by Petrobras refineries.
The commercial strategy uses market references such as: (a) the customer’s alternative costs as expected value have priority in pricing, and (b) the limit for Petrobras. Customer’s alternative costs include the main supply alternatives, regardless of whether they are suppliers of the same products or of products Substitutes, while the limit for Petrobras is based on the opportunity cost given the different alternatives for the company, including production, import and export of said product and/or Oils used for refining.
Adjustments will continue to be made without a defined periodicity to avoid impacting prices internal effects of economic volatility on international prices and the exchange rate.
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Business strategy decisions remain subject to the Market Executive Group and Price, comprised of the company’s president, general manager of logistics, commercialization and Markets and the Chief Financial and Investor Relations Officer.
The business strategy is in line with the Internal Market Pricing Directive (Guideline). Approved by the Board of Directors on July 27, 2022.
The commercial strategy is based on the premise of competitive pricing per distribution center in balance with the national and international markets considering the best alternative accessible to customers. The The strategy allows Petrobras to compete more efficiently considering its stake in the market to optimize its refinery assets and profitability in the long term.
The change gives Petrobras more flexibility to price competitively and take advantage better production and logistics conditions and dealing with other actors who commercialize Fuels in Brazil as distributors and importers.
Competitive pricing maintains a price level that ensures investment is made provided in the strategic planning, under the premise of ensuring the financial sustainability of the Company. Petrobras increases its commitment to value creation and sustainability to ensure a long-term financial position and to keep its performance in balance with the market.
Price adjustments for diesel and petrol will continue to be announced on the communication channels Customers and on the company’s website (precos.petrobras.com.br), where information on its share and that of other actors in the formation and composition of average fuel prices is also available to the consumer.
(with Estadão content)
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