Brazil: Bolsonaro sacks Petrobras president after fuel price hikes

Posted 29 March, 2022

Brazil's President Jair Bolsonaro on Monday sacked the chairman of state-owned oil group Petrobras, Joaquim Silva e Luna, in the government's crosshairs for sharply raising fuel prices seven months before the elections.

This dismissal, first announced by the Brazilian media, was confirmed Monday evening by the Ministry of Mines and Energy, which proposed the economist Adriano Pires, a consultant specializing in gas and oil, to replace Mr. Silva e Luna at the head of Petrobras.

This appointment will have to be confirmed on April 13 by the company's board of directors, the ministry said.

The ministry has also proposed to appoint the entrepreneur Rodolfo Landim as head of the board of directors. Mr. Landim, who worked at Petrobras for more than twenty years, is currently president of Flamengo, the most popular football club in Brazil.

Mr. Silva e Luna, a reserve general, and ex-Minister of Defense, had been appointed in February 2021. His predecessor Roberto Castello Branco, a respected economist, had also been sacked by Mr. Bolsonaro, also after increases in salaries. fuel prices.

Petrobras announced in early March an increase of 18.8% in the price of gasoline and 24.9% of diesel from its refineries, due to the disruption caused on the world oil market by the war in Ukraine and the sanctions against Russia.

This increase had been criticized by Mr. Bolsonaro, who is trying to curb stubborn inflation seven months before the presidential election in which he intends to run, but for which the polls give him the loser for the moment against the former left-wing president Luiz Inacio Lula da Silva.

The far-right head of state said on March 10 that Petrobras' policy of matching international oil prices "cannot continue".

 

Stock drop

 

Petrobras shares ended down 2.63% on Monday on the Sao Paulo Stock Exchange.

"These changes in the management of the company are not good. It is a sign that there is a problem somewhere," commented Alex Agostini, an economist at Austin Rating.

"But for the market, it will not change much. If it is confirmed that the new president will be Adriano Pires, an oil and gas specialist, it will bring stability," he added.

Mr. Pires is the founder and director of an energy consulting firm, the Brazilian Infrastructure Center. He previously headed Brazil's National Petroleum, Natural Gas, and Biofuels Agency.

In an interview with CNN at the beginning of March, he had supported the price increases practiced by Petrobras, deeming them inevitable.

"There was no way Petrobras wouldn't raise prices because the price gap between internal and external markets was too big," he said. "This difference was creating a risk of shortage in Brazil. The country imports 30% of its consumption of petroleum derivatives. If the gap is too great, no one imports and the stocks are empty".

Petrobras, of which the Brazilian state is the majority shareholder, ended the year 2021 with a record net profit of nearly 20 billion dollars.

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