BRAZIL: Judge authorizes direct sales of ethanol for mills in Pernambuco, Alagoas and Sergipe

Published: 06/27/2018, 5:07:34 PM

A Brazilian judge in a local court in the northeastern state of Pernambuco granted a preliminary injunction on Tuesday allowing mills in the states of Pernambuco, Alagoas and Sergipe to sell hydrous ethanol directly to fuel stations, according to Brazil's O Estado de S. Paulo news website.

The decision also prevents the National Oil, Natural Gas and Biofuels Agency (ANP) from applying sanctions to the fuel stations and mills that decide to adopt the practice.

The Brazilian Senate has already approved the direct sales of ethanol in the country, but the project still needs to be approved by the House of Representatives to become effective.

Ethanol producers in the northeast region have been defending the change in the sales rules but mills in the centre-south represented by cane industry association UNICA are against the measure which they say would hinder the implementation of RenovaBio. The national biofuels policy dedicated to incentivize ethanol production and consumption in the country will be based on the trade of decarbonization credits between biofuel producers and distributors to raise funds to be reinvested in the sector. 

UNICA also says that excluding distributors from the biofuel trading process could result in higher taxation on producers and tax evasion.

Judge Edvaldo Batista da Silva granted the permission for direct sales in the three northeastern states citing the need for free competition in the fuel sector. His decision will benefit 30 mills, according to the president of Pernambuco's cane industry association Sindacucar, Renato Cunha.

But the injunction should have little effect in the short term due to low ethanol stocks during the off-season in the northeast.