The Brazilian National Agency of Petroleum, Natural Gas and Biofuels (ANP) has approved a BRL877m (roughly US$212m) subsidy to national oil and gas company Petrobras (BRL871m or US$211m), Petro Energia and Dax Oil, to compensate for diesel subsidies set in May 2018. Petrobras will be granted an additional payment of BRL706m (over US$170m).
The diesel subsidy programme was adopted at the end of May 2018 to end the truck drivers' strike over rising diesel prices. The government lowered diesel prices through tax cuts and subsidies, but the prices set have been too low to compensate most diesel importers, resulting in reduced supply (potential diesel shortage at the end of 2018) and forcing Petrobras to sell diesel at a loss.
The diesel subsidy programme will remain in effect until the end of 2018 and its benefits will be limited to BRL9.5bn (US$2.3bn) until December 2018.