Brazil Petrobras sees fuel increase alternatives-CEO

* Brazil Petrobras might not need to raise consumer prices

* Lower fuel taxes could avoid spurring fuel inflation

SAO PAULO, April 10 (Reuters) – Brazilian state oil company
Petrobras (PETR4.SA: Quote, Profile, Research)(PBR.N: Quote, Profile, Research) could get more money from domestic
fuel sales without raising consumer prices and stoking
already-fast inflation, the company’s chief executive said in
an interview published on Sunday.

Rising oil prices have threatened to cut into Petrobras’
profits from sales in Brazil, where prices for gasoline and
diesel have not changed since 2009, despite a broad rise in oil
prices and a recent crude rally sparked by unrest in North
Africa and the Middle East.

“The price of gasoline can be readjusted to reflect the
increase in the price of oil, without that cost being passed
along to the consumer,” Jose Sergio Gabrielli said in an
interview with the newspaper O Globo, pointing out that various
taxes form a considerable part of the cost of fuel at the
pump.

Petrobras sells gasoline to distributors for a price of 1
real (64 cents) per liter compared to an average sale price of
around 3 reais, Gabrielli said.

The company earlier said in a press release that taxes
accounted for 41 percent of the price of gasoline for
consumers, while around a third of that amount went to
Petrobras.

Keeping the cost of fuel steady as crude prices continue to
climb could crimp margins and lead to investor complaints.

But lower taxes on fuel would let the company receive
better margins for gasoline sold domestically without raising
prices at the pump.

That is important because Brazilian inflation is speeding
near a government ceiling. In the 12 months through March,
inflation hit 6.3 percent, and this year the central bank is
targeting inflation of 4.5 percent, plus or minus 2 percentage
points.

Inflation is a political hot potato in Brazil, where voters
have long memories of runaway prices of the 1980s and ’90s.

While policy-makers have repeatedly said inflation will
slow in coming months, some analysts have said the annual
inflation rate could breach the government target soon.

Brazilian gas prices could fall behind global prices,
Gabrielli said, noting the opportunities for foreign companies
to buy gasoline in Brazil and sell the commodity abroad for a
profit.
($1=1.572 reais)

Brazil Petrobras sees fuel increase alternatives-CEO