ANP’s solution for the direct sale of ethanol fuel from producer to gas station: the “binding distributor”
Author: Bárbara Teles
As expected by the industry, the Brazilian Agency of Petroleum, Natural Gas and Biofuels (ANP) is going to make changes in the current Resolution in order to loosen the regulation to reduce the costs for ethanol producers to sell the hydrous ethanol, though the creation of a new agent named as “binding distributor” (producers own associated distribution arm).
This initiative arose from discussions held after the truck driver’s strike in 2018 when ANP and other control agencies began to discuss the possibility of allowing the direct sale of hydrous ethanol fuel from producer to gas station. With this recent development, ANP’s intention is to provide more options to agents involved in the sale of hydrous ethanol.
As a consequence, ANP’s Board approved the inclusion of a draft Resolution in Public Consultation. The period for receiving contributions started on October 5th and will be open until November 19th. A Public Hearing to discuss the changes will be held via videoconference on November 24th.
According to the draft Resolution which intends to make changes in the ANP’s Resolution N. 43/2009 and others, the “binding distributor” is a legal entity controlled directly by the ethanol producer which will connect ethanol producers to retailers. The Agency intends to create an economic agent restricted to the sale of hydrous ethanol which can use the same facilities of the ethanol producers. The “binding distributor” will only be able to commercialize the hydrous ethanol fuel produced in the plants of the same commercial group.
This new figure will be responsible for collecting the same taxes charged on distributors, RenovaBio program obligations, and accountability of this fuel quality.
Regarding the tax issue, in the current legislation (in force) both producer and distributor are responsible for paying some of the taxes for ethanol’s commercialization. The federal contributions PIS/PASEP and COFINS are collected both in the production agent (R$ 0,1309 per liter) and distribution agent (R$ 0,1109 per liter). Due to this, if Brazil implements an effective direct sale, there will be needed a fiscal adaptation to adjust tax rules in order to allow this commercialization, ensuring the current tax collection amount.
On other hand, the creation of a new agent, named as “binding distributor”, does not completely fulfill the initial purpose of the change in the regulation. The possibility of changing the current supply chain, removing the necessity of a distributor agent, is to facilitate the commercialization of hydrous ethanol and make the fuel cheaper for the final consumer, which probably will not be reached by creating a new agent in the supply chain, responsible for replacing the common distributor.
On other hand, it makes it easier for the ethanol producer to commercialize the fuel, as it can create their own agent linked to its facilities and structure and will not depend on a distributor agent to sell the hydrous ethanol to gas stations.
Another topic to pay attention is that, when the studies of direct selling begun, it was discussed the possibility that both producers and importers could commercialize directly with the gas station. Despite that, there is not a provision in the draft of Resolution for the creation of those “binding distributors” by ethanol importers, only by producers or cooperatives of ethanol producers. For importers agents, the supply chain remains the same.
By launching this Public Consultation, ANP complies with the guidelines established by the National Council on Energy Policy (CNPE) for implementation of direct sale of ethanol fuel, published on July 1st (CNPE’s Resolution N. 02/2020). For the direct sale studies and implementation, CNPE determines that ANP must consider the following guidelines: competitive isonomy in fiscal aspect and maintenance of tax collection amount; availability to the interested agents to adopt this modality of commercialization; and same ethanol’s standards and quality specifications for all ways of selling.
The draft of the Resolution and the Technical Note were published last Monday by ANP and can be accessed on its institutional website.
Contribution to Brasil-U.S. Business Council