Brazilian President Luiz Inacio da Silva has vetoed a deal struck by a Brazilian state with neighboring Venezuela to buy its fuel at discounted prices, state press said on Friday.

Lula made the decision after meeting Ottomar Pinto, governor of the northern state Roraima, and a team of state legislators on Thursday.

Lula barred the subsidized purchase of Venezuelan fuel citing what he described as "a dangerous precedent."

State company Petroleos de Venezuela had authorized the sale of fuel to the state, following a pattern set in Colombia and Cuba, but Roraima's government needed the central government's approval.

Venezuela's deal could have allowed residents to buy gasoline at 1.40 reais (0.68 U.S. dollars), half the current price, and diesel at less than a real per liter.

Marcio Junqueira, a legislator who was present at the meeting, said that Brazilian state company Petrobras had opposed the project.

Lula said that if Roraima were allowed to import foreign fuel, all the border states would seek the same treatment. The import proposal has been on the table since April 2006.

Source: Xinhua