Brasília, 2/22/2006 (Agência Brasil - ABr) - The government's decision to reduce the sugarcane-based ethanol additive it puts in gasoline in Brazil from 25% to 20%, was praised by the president of the Fuels and Lubricants Federation (Federação Nacional do Comércio de Combustíveis e Lubrificantes) (Fecombustíveis), Luiz Gil Siuffo. According to Siuffo, the decision was the best way to reduce ethanol consumption and control the market price which has risen gradually over the last few months.

In January, in an attempt to stem the rise of ethanol prices, the government negotiated an agreement with sugarcane mill owners (usineiros) to keep their price at R$1.05 per liter. But strong demand sank the agreement.

Siuffo says that with the 5 percentage points reduction in the amount of ethanol added to gasoline there will immediately be a surplus of 100 million liters on the market and the usineiros will reduce their prices. He says that at the moment the country is consuming 500 million liters per month of sugarcane-based ethanol and that consumption should drop to 400 million liters per month.

Siuffo added that sugarcane growers and mill owners will continue to attempt to control the market.

Translation: Allen Bennett