Brazil takes action to boost ethanol industry

By Erin Voegele | April 24, 2013

Brazil’s Ministry of Finance has announced it will take additional action to increase production and investment in its ethanol industry. In March, the government published an official notice to increase the mandatory blend level of anhydrous ethanol to 25 percent, effective May 1. On April 23 the country’s Ministry of Finance highlighted three additional measures that will be taken to boost competitiveness and ethanol development in Brazil.

According to information published by the ministry, one measure includes a cut of the PIS/COFINS tax. As a result, the rate will drop from BRL 0.12 per liter (approximately 12 percent) to nearly zero.

The second measure includes an interest rate reduction for the Brazilian Development Bank’s (BNDES) Prorenova program, which aims to increase the production of sugarcane by funding the renovation and establishment of new plantations. Information included in the statement specifies the annual interest rate will be set at 5.5 percent, a significant reduction compared to the 8.5 percent and 9.5 percent interest rates that were in place last year.

Finally, the Ministry of Finance said it will make BRL 2 billion in funding available to create new ethanol storage capacity, at an annual interest rate of 7.7 percent.