Brazilian state-owned oil and gas company Petrobras has approved a new pricing policy for diesel and gasoline, replacing the previous policy, which had commercial prices set by its refineries. 

This strategy prioritises pricing by providing the customers with alternative costs, and marginal value for the company, Petrobras said in a statement. 

“With this commercial strategy, Petrobras will be more efficient and competitive, acting with more flexibility to dispute markets with its competitors,” said Petrobras president Jean Pual Prates. 

The policy approval ends mandatory compliance to the import parity price by maintaining alignment with competitive prices by point of sale. The company said the competitive pricing “maintains a price level that guarantees the realisation of investments foreseen in strategic planning”. 

Diesel and gasoline prices will fall by almost 13% starting Wednesday under the new pricing policy. Reuters reported that liquified petroleum gas (LPG) will also fall by more than 21%

Further readjustments will be made whenever necessary in order to avoid the volatility of international and exchange rates. This will ensure optimal participation in the market, optimisation of the refining assets and profitability in a sustainable way, the company said

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The policy will be tested when oil prices for motor fuels or LPG rise, and by what customer demand dictates. An oil expert said Petrobras must import fuel at market prices to meet demand, Reuters reported. By not doing so, the company could incur losses if prices go higher and the same is not passed on to the customers. 

Brazilian President Luiz Inacio Lula Da Silva was publicly critical of privatising companies such as Eletrobras under the former president’s term. Petrobras has been under pressure to reduce fuel and gasoline prices since Lula was elected. 

According to Petrobras, diesel and gasoline price adjustments will be disclosed on the communication channels and the company’s website for customers’ convenience. 

For now, Reuters reported Petrobras’ shares have risen by almost 5% after the approval of the pricing policy.