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COMMENTAR
      LatAmOil                                      COMMENTARY Y                                          LatAmOil






























                                                                            Bolsonaro, shown on April 21 (Photo: Twitter/@jairbolsonaro)
       The energy factor in





       Brazilian elections





       Fuel prices and the possible privatisation of Petrobras are likely to

       come into the spotlight as Bolsonaro seeks re-election this October



                         BRAZILIAN President Jair Bolsonaro has had   re-election later this year. He has not been poll-
                         to confront a number of major challenges related   ing well against his main opponent – former
       WHAT:             to the energy sector over the last two years.  President Luiz Inacio Lula da Silva, a leftist who
       Rising world oil prices   The most prominent of these was proba-  is on the other end of the political spectrum
       are forcing Bolsonaro   bly the coronavirus (COVID-19) pandemic,   from him – and therefore he needs every vote
       to confront yet another   in which the twin collapse of global demand   he can get.
       economic challenge.  and prices for crude oil and natural gas led to a
                         considerable slowdown in production growth.   Why Bolsonaro pays attention
       WHY:              However, Bolsonaro has also had to contend   For example, he cannot afford to lose the sup-
       The stakes are high, as   with the impact of the drought that emerged in   port of independent truck drivers, who have
       the president hopes to be   2020-2021, drastically reducing the country’s   been among his main backers in the past.
       re-elected in October.  hydropower generating capacity and forcing it   And since these truckers are directly affected
                         to import additional gas by pipeline and tanker   by higher diesel fuel prices stemming from the
       WHAT NEXT:        to cover domestic demand.            rise in crude oil prices, he has repeatedly badg-
       Bolsonaro and Lula may   He is now facing another major challenge –   ered the national oil company (NOC) Petrobras
       end up sparring over the
       proposed privatisation of   namely, containing the economic impact of the   about its policy of selling petroleum products at
       Petrobras.        rapid increases in world crude oil and wheat   rates that are in line with global market trends.
                         prices that have followed the Russian invasion   He has also made his displeasure over Petro-
                         of Ukraine in late February. The bull market for   bras’ moves to exercise its right to independence
                         these commodities has already lifted the cost   from state control by exercising his own prerog-
                         of basic goods and services around the world,   ative to dismiss the government-owned compa-
                         and it is not clear how long or how extensive the   ny’s CEOs after they have rebuffed his requests
                         increases will be. Brazil has not been immune   for fuel price relief.
                         to the price rises, and Brazilian consumers are   (Since the beginning of 2020, the president
                         certainly not happy about them.      has dismissed two Petrobras heads after spar-
                           And Bolsonaro has reason to be concerned   ring with them publicly over petroleum product
                         about their unhappiness – not just because   pricing. Just last month, the company swore in
                         he is president, but because he is standing for   its third CEO in two years.)



       P4                                       www. NEWSBASE .com                           Week 19   12•May•2022
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