(Bloomberg) -- President Jair Bolsonaro is getting closer to having a role in making gasoline and diesel less expensive for Brazilian drivers after a key senate panel advanced a bill that aims to stabilize fuel prices.
The Senate Committee on Economic Affairs on Tuesday approved proposed legislation that would allow the government to establish price bands for fuel, and to tax oil exports progressively -- with levies getting higher, the higher the price of crude -- to protect domestic supplies. The bill also calls for a stabilization fund to help reduce price volatility.
Bolsonaro has been on a tug of war with state-controlled Petroleo Brasileiro SA over surging fuel prices as the country struggles with double-digit inflation ahead of a presidential election next year. Petrobras has so far resisted political pressure from both the government and the opposition to make fuel artificially cheaper for drivers.
But it’s unclear how detrimental the proposed bill would be to Petrobras because it also calls for adherence to international prices.
Petrobras shares briefly erased gains on the news before resuming their advance. Shares were up 1.3% to 29.27 reais at 1:37 p.m. in Sao Paulo.
The bill has now been sent to the Senate floor for discussion, though there’s no date for a vote. Petrobras didn’t immediately respond to a request for comment on the bill.
The proposal adds uncertainty to Brazil’s oil industry at a time the country is looking to attract investments in both oil production and refining. This month, the government is offering acreage in the deep-water, pre-salt region that’s home to Brazil’s biggest discoveries.
“We are in the midst of an energy transition and there are fewer and fewer incentives for large companies to invest in oil. Creating an export tax creates yet another barrier to foreign investment,” said Ilan Arbetman, analyst at Ativa Investimentos.
Mines and Energy Minister Bento Albuquerque said in a recent interview that the proposed export taxes will help finance the stabilization fund.
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