Difficult period for Petrobras, a Brazilian heavyweight

Petrobras is a flagship of the Brazilian industry and is going through a turbulent period. The giant must juggle political pressure and an almost impossible mission to lower fuel prices in the midst of an international crisis.

The country’s largest company, the state-owned oil company, has barely had time to navigate calm waters again after the storm of the “Lavage Express” corruption mega-scandal.

Petrobras had a record net profit in 2021 of nearly $ 20 billion, but its turnaround has taken a back seat as tensions around its executives capture attention.

Last week, far-right head of state Jair Bolsonaro fired General Joaquim Silva e Luna, the company’s second president, during his tenure, criticizing the “lack of sensitivity” in his pricing policy.

His predecessor, Roberto Castello Branco, was fired a year ago due to a disagreement with Jair Bolsonaro over fuel prices set by Petrobras.

The price of fuel, in line with the international market, has risen by 33% in one year, a price that the head of state considered “impossible to pay”.

In this election year, which will feature a highly polarized presidential election, Jair Bolsonaro’s main opponent, the left-leaning ex-president Luiz Inacio Lula da Silva, also went there with his girls against the oil company.

“Get ready, we must + Brazilianize + the price of fuels”, the former trade unionist recently launched during a speech in Rio de Janeiro.

But Petrobras’ internal rules, listed on the stock exchanges in Sao Paulo and New York, and the fact that Brazil is not self-sufficient in oil, prevent any drastic change in pricing policy, according to analysts consulted by AFP.

“We could create a stabilization fund to curb price fluctuations, but it is not possible to change the price policy fundamentally,” explains Gesner Oliveira, an economist at the Getulio Vargas Foundation.

Complicated succession

About 75% of Brazilians hold President Bolsonaro responsible for double-digit inflation, exacerbated by rising fuel prices.

For Gesner Oliveira, Joaquim Silva e Luna was sacrificed by Bolsonaro “to satisfy his electorate”.

“Manipulating price policy is like manipulating the law of gravity,” General Silva e Luna said in an interview with the weekly Veja, after being fired.

But the government has since his dismissal had major problems finding him a successor.

The first to be appointed, economist Adriano Pires, resigned to take up this position due to a possible conflict of interest with his consulting firm.

The Brazilian press reported several denials from other contacts until the government on Wednesday finally elected José Mauro Coelho, who was in charge of oil issues in the Ministry of Mines and Energy.

His appointment will only be possible after approval of his appointment at the general meeting on 13 April.

In 68 years of existence, Petrobras has known a waltz of presidents: 39 precisely, with an average life expectancy of less than two years.

“It’s a position that is under very strong political pressure, and each dismissal is like a slight political reaction to a complex economic problem,” said Adriano Laureno of consulting firm Prospectiva.

“Inheritance”

Another hot topic: a possible privatization of Petrobras, which President Bolsonaro has already mentioned several times.

On the sidelines of negotiations on Brazil’s accession to the OECD in Paris, Economy Minister Paulo Guedes, an ultra-liberal “Chicago Boy”, said in late March that he “dreamed” of privatizing the company. , but assured that this would not take place during the current “first period” for Jair Bolsonaro.

Petrobra’s fate is therefore closely linked to the October presidential election with its share of uncertainties, with Lula currently the favorite in opinion polls.

In order for privatization to take place, it must be approved by parliament, whose majority of elected representatives are still opposed to the idea, as are Brazilians in general (54%), according to a Poderdata poll.

“In parliament and among the people, Petrobras is considered the jewel of the Brazilian state,” says Adriano Laureno.


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