Brazil’s flagship free cooking gas program is under pressure as surging global energy prices threaten its sustainability, industry players warn, just months ahead of the country’s October presidential election.
President Luiz Inácio Lula da Silva launched the “People’s Gas” initiative in November to provide free liquefied petroleum gas (LPG) to roughly 50 million low-income Brazilians, making it a central pillar of his social and energy policy as he seeks reelection.
However, distributors and resellers say sharp increases in LPG import costs, driven partly by global market volatility linked to the ongoing war, are eroding already thin profit margins for those supplying the program.
On Monday, the government announced a 330-million-real subsidy to support LPG imports, aiming to cushion the impact of rising prices. It has also allocated about 4.7 billion reais for the program this year after Congress trimmed earlier budget estimates.
Resellers say the program’s rules prevent them from raising prices despite higher costs, forcing some to operate at a loss. Industry association Abragas warned that several suppliers may withdraw if pricing terms are not revised.
Energy analysts say the government may need to introduce an extraordinary pricing mechanism to shield the scheme from extreme market swings.
The pressure is compounded by rising logistics expenses, with higher diesel prices pushing up the cost of transporting LPG cylinders across the country.
If resellers begin to exit the program, gas availability for beneficiaries could decline, potentially creating political challenges for the government as the election approaches.