Brazil’s ‘first ethanol billionaire’ hits at petrol price curbs
Rubens Ometto, the sugar cane tycoon, has described government petrol price controls as a “disaster”, in a rare outburst for Brazil’s normally reserved business community.
The chief executive of Cosan, the sugar and logistics company, ratcheted up the pressure on President Dilma Rousseff’s government, which is already unpopular with markets, by telling a gathering of Brazil’s business elite that the government needed to “get off the backs of entrepreneurs”.
Mr Ometto, described by Forbes magazine as the first ethanol billionaire, said the government’s price controls for state-owned oil company Petrobras were destroying the country’s prized ethanol industry. Petrobras is being forced to import petrol at international prices and sell it domestically at a discount to help control inflation, meaning ethanol producers have to compete with subsidised gasoline.
“If this policy has for us [ethanol producers] been ruinous, it has been fatal for Petrobras,” Mr Ometto said at a Brazilian American Chamber of Commerce awards dinner in New York late last week, at which he was honoured for his contribution to Brazilian business.
Ms Rousseff’s government holds a strong lead heading into elections scheduled for October, but she has been falling in opinion polls. Each dip in her popularity has helped drive a rally in the country’s stock market as investors bet that a victory for the opposition or a weakening of the president in her second term could lead to more business-friendly policies.
Aside from the petrol price controls, investors point to the government’s intervention in electrical energy prices, its maintenance of a minimum wage policy not linked to productivity and its previous meddling in currency markets as destructive for the investment climate.
“This [petrol price policy] is a disaster because businessmen cannot plan,” Mr Ometto told the FT. “It is one thing if you plan a business and you commit an error in your projections and diagnoses; it’s another thing if you are penalised because the rules change in the middle of it.”
Mr Ometto’s outspoken comments were unusual in a business community that generally keeps very close ties with government. While big Brazilian companies tend to be well managed, the government’s central place in the economy, given its sheer size, means most rely on it for some business.
BNDES, Brazil’s development bank, is also the main source of long-term lending in the economy, with big business dependent on its allocations of loans at cheaper rates than those available from private-sector banks.
In his speech to the awards dinner – whose attendees included Luciano Coutinho, the head of the BNDES – Mr Ometto called on the government to lift burdens such as a convoluted taxation system and difficult labour laws.
If the government could not help, it could “at least not get in the way”, Mr Ometto said.
His company, Cosan, is also a partner of Anglo-Dutch group Shell.