Posted by Vivek Mehta on 29 May, 2018
In the 1960s, only 18 percent of Brazilian households had access to LPG or natural gas. Today, 98 percent of all households— and 100 percent of urban households—have access to LPG. The Brazilian government was motivated by the view that energy should be provided to all citizens. Three main factors explain Brazil’s success: creation of a national infrastructure for LPG production and distribution; creation of a retail market that featured the participation of private entrepreneurs; and provision of subsidies to ensure affordable prices to consumers.
Unlike other countries, Brazil did not first embark on an effort to improve biomass cookstoves. The state oil company, PETROBRAS, was charged with producing (and importing, if necessary) LPG and distributing it to private companies and retailers. Initially, the government created franchises for LPG distribution with exclusive regional concessions. Later, commercialization quotas were given, opening up competition. With greater competition came improved service and an emphasis on branding and quality certificates.
The government administered and controlled prices by subsidizing production costs. LPG was subsidized by a cross subsidy scheme, with funds collected from various petroleum fuels. In 2001 end-user prices for LPG were liberalized. The previous subsidy for all LPG users was replaced by a subsidy only for families with a monthly per capita income of no more than half the minimum wage (part of the Bolsa Família program). An estimated 8.5 million households receive the monthly LPG voucher, allowing them to purchase a 13-kilogram (kg) LPG bottle, sufficient to meet cooking needs for one month.
Taken from the working paper ‘Powering Cities in the Global South’ by Michael I. Westphal, Sarah Martin, Lihuan Zhou, and David Satterthwaite
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