May 8, 2021

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Petrobras ousted leader retaliates against Bolsonaro

3 min read


The outgoing head of Brazilian oil group Petrobras has hit back at President Jair Bolsonaro and suggested the populist leader could impose artificial limits on the price of fuel.

“If you want to have a market economy, you have to have a market price. The prices below have many consequences, some predictable and others unpredictable, but all negative, ”said Roberto Castello Branco, who was returned by Bolsonaro last week following a dispute over the price of gasoline and diesel.

With elections looming next year, the Brazilian president is keen to consolidate the support of leading voters, including the tens of thousands of truckers across the country who have protested strongly in recent weeks against rising fuel costs.

But the decision to replace the University of Chicago-trained Castello Branco with a former Army general with no oil and gas background rocked the Brazilian markets this week with Petrobras losing 20% ​​of its value on Monday – more than $ 13 billion. The turmoil also spread to the currency, which fell 2%.

To many, this suggested that the Brazilian government was again intervening in the operations of the oil group, which was pushed to the brink of bankruptcy under the administration of former President Dilma Rousseff in part because of its efforts to subsidize the price. fuel.

Castello Branco’s proposed replacement – General Joaquim Silva e Luna – has also done little to mitigate investor concerns, the former defense minister saying he thinks state-controlled companies should “consider social issues.”

Castello Branco hit back on Thursday, saying attempts to deviate from the current policy of pegging to international rates would be ruinous for the company.

“Previous attempts to evade Petrobras’ parity rule have proven disastrous. We have lost $ 40 billion, ”he said, referring to the policies of the Rousseff administration.

“Since then, we’ve reduced our debt by almost $ 36 billion, but it’s still a heavily leveraged business and our debt is in dollars. How are you going to reconcile dollar denominated bonds with the local currency? “

The replacement of Castello Branco by Silva e Luna should be formalized by a shareholder vote in the coming weeks. The Brazilian state owns around 36.8% of Petrobras but 50.5% of the voting rights. At a board meeting this week, only two members voiced objections to the summit review.

Shortly after the announcement of Castello Branco’s replacement, Bolsonaro – who has long played down the severity of the pandemic despite capturing Covid-19 – also suggested the executive was lazy given he had passed the last year to work from home.

Castello Branco did not accept the elongated insult, saying that working from home had for Petrobras “not only reduced the rate of viral contamination, but also reduced costs and increased productivity”.

“And in the future, we will be migrating to a hybrid plan that has been approved by the vast majority of our employees.”

His comments came as Petrobras unveiled last year’s results, which he said were “marked by countless challenges caused by the Covid-19 pandemic and the consequent decline in global fuel demand.”

The Rio de Janeiro-headquartered group reported a 10% annual drop in revenue to R $ 272 billion ($ 49.7 billion) and an 82% drop in net profit to R $ 7 billion. $.

Additional reporting by Carolina Pulice



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