By Mario Osava
RIO DE JANEIRO, Feb 5 1996 (IPS)

Good sugar prices, cheap petrol, South American economic integration and abandonment by the automobile industry and consumers have conspired to push Brazil’s Combustible Alcohol Programme (Proalcohol) back onto the shelf.

Ten years ago this environmental and energetic innovation meant that 91 percent of the vehicles produced in the country ran on alcohol, compared with two percent at present.

The present stock of 4.2 million alcohol-powered vehicles is slowly reducing.

As a result, the agroindustry involved with this sector considered it had been betrayed by the government, and called the Parliamentary Sugar-alcohol Front together in Brasilia to push for a relaunch of Proalcohol.

Brazil’s President Fernando Cardoso met with group representatives last week but he merely palmed them off with vague promises.

Sonce last October, an interministry committee has been looking into ways of increasing the production of alcohol propelled vehicles.

“The government believed in proalcohol and got the producers to participate. It can’t abandon them now,” said deputy Helio Rosas, president of the Parliamentary Front.

His feeling was also reflected amongst entrepreneurs in the sector, according to Mario Perrucci of the Society of Sugar and Alcohol Producers based in Sao Paulo.

Proalcohol was launched by the military regime in 1975, a strategic move aimed to reduce Brazilian dependence on imported petrol which had increased drastically in price.

From that time, the national oil producer Petrobras more than doubled internal production of petrol and now satisfies 60 percent of national needs, while international prices have stabilised.

Alcohol became more expensive compared with petrol derivatives meaning that its production needed increasing subsidies.

“We are not competitive like the petrol sector. Our production needs incentives,” said Walter Annicchino, president of the Sugar Industry Union of Sao Paulo State.

The alcohol producers demand this fuel should be brought back onto the market at 66 percent of the petrol prices. This would mean a big increase in the subsidy which already reaches 81.5 percent of the price in Rio de Janeiro.

Proalcohol lost its strategic importance, though it is important environmentally as it is less polluting than petrol derivatives and makes a great contribution to improving air quality in big cities, said Perrucci.

The industry reduced the production of alcohol-fired vehicles because they claimed there was no market, for though alchohol is cheaper than petrol by quantity, per kilometre it works out more expensive.

Also, when sugar prices picked up on the world market last year, alcohol prices rose accordingly.

In 1995 the country exported 5.9 million tons of sugar making an income of 1.8 billion dollars, 85 percent up on 1994, and instead of meeting the proalcohol sugar quota, the industry prefers to import alcohol than provide its own sugar.

Proalcohol is also up against pressure from the regional integration programmes, where neighbouring nations like Argentina, Brazil and Venezuela are considering agreement which go further than mere trade issues.

Brazil will import large amounts of gas from Bolivia from 1998 onwards, and Argentina will later supply them with even cleaner liquid gas fuel which Cardoso permitted for use in all vehicles two weeks ago.

At the moment liquid gas fuel use for vehicles is limited in the mid-term by distribution limitations, said Perrucchi, but it could in the long-term be used to substitute diesel for trucks and buses, he added.

The proalcohol relaunch may also include a contribution from an additional tax on the more environmentally damaging fuels, or “green fleets” of alcohol propelled public transport or company vehicles.

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