Page 5 - LatAmOil Week 19 2022

LatAmOil COMMENTARY LatAmOil

At the same time, though, Bolsonaro has con- narrowed by four percentage points to 14%.
tinued to appoint candidates to the CEO posi- However, there is likely to be plenty of frus-
tion who are at least nominally committed to tration with Petrobras among Brazilian voters in
the principle of Petrobras’ independence from the run-up to the presidential election in Octo-
state control. ber. Just a few days after Bolsonaro criticised its
And in practice, once these candidates have record-high profits, the NOC announced an
taken office, they have proved to be actually 8.87% increase in refinery-gate prices for diesel.
committed to letting Petrobras continue to set As a result of this move, diesel prices have now
its own rates rather than giving the government gone up by 47% since the beginning of the year.
any control over pricing. (There has been occa- This is not wholly unreasonable, in light of
sional talk of using the company’s dividends to what global crude oil markets have been doing,
relieve the burden of rising fuel prices, but so far but it has led Brazilian truck drivers to threaten
the talk has borne no fruit.) strikes and road blockades on May 21. The threat
is likely to worry both Brazilian voters and Bol-
Contradictory approach sonaro, given that memories of a similar strike
This pattern of appointing CEO candidates who that ended up paralysing the country’s economy
uphold Petrobras’ independence from the state for weeks in 2018 are still vivid.
while pushing the company to uphold the gov-
ernment’s policy priorities may sound contra- The privatisation option
dictory, but it does have some benefits for the But will that worry be enough to lead the pres-
president. ident to abandon his policy of having his cake
One possible upside is the benefit of con- and eating it too – that is, of pushing Petrobras
sistency with Bolsonaro’s earlier statements in to implement the government’s policy priorities
favour of free-market economics. This is likely while filling its leadership ranks with people
to prove ultimately hollow, though, in light of the who intend to uphold its independence from
fact that the president seems now to be leaning the state?
more in the direction of right-wing populism Probably not. Instead, it may be bringing the
than right-wing capitalism. government back to the idea of privatising the
Far more important is the fact that Petrobras company.
is Brazil’s largest corporate taxpayer. In other At his first press briefing, Adolfo Sachsida, Brazilian voters
words, it is in the government’s best interest to Albuquerque’s replacement as the Mines and
give the company room to stay profitable so that Energy Ministry, said he wanted the govern- will probably
it can make large contributions to the budget. ment to consider the option of selling Petrobras,
Meawhile, Petrobras also makes a useful as well as Pre-Sal Petroleo SA (PPSA), which be hearing a
whipping boy when its profits are high and manages Brazil’s lucrative offshore pre-salt oil
officials in Brasilia need an excuse to complain and gas fields. “I request the beginning of the great deal about
that the NOC is paying dividends to sharehold- studies pending the proposal of the legislative Petrobras from
ers or investing in exploration and production changes necessary for the Petrobras’ privatisa-
rather than channeling profits into social pro- tion,” he was quoted as saying by Reuters. He Bolsonaro in the
grammes. Indeed, Bolsonaro indulged in a bit also said he hoped to submit a request to that
of this on May 5, when he lambasted his Mines effect to the president in the near future. near term
and Energy Minister Bento Albuquerque and Sachsida characterised privatisation as a
Petrobras’ newly appointed CEO Jose Mauro means of getting consumers out from under
Coelho during a speech broadcast on his social the company’s control, saying: “We are going to
media channels. liberate the Brazilian people from monopolies.”
“Minister Albuquerque and Jose Mauro, This is not the first time the Bolsonaro
from Petrobras, you cannot increase diesel administration has considered a sell-off; the
prices. I am not appealing, I am making a state- president was reported to be looking into this
ment taking into account the abusive profit option in 2019.
you guys have,” he said, referencing Petrobras’ However, he appears to view a sale as more of
announcement in the first week of May that it a means of ridding the government of a problem
had earned a record-high net profit of $8.9bn – or washing his own hands of the company’s
in the first quarter of 2022. “You cannot break unpopular pricing decisions. (“Every bad thing
Brazil. It is an appeal now: Petrobras, do not that comes from Petrobras is my fault,” he com-
break Brazil. Do not rise prices. I cannot inter- plained in November 2021.)
vene. You made a profit, you have ‘fat’ and you It seems unlikely that there will be much
have the social role of Petrobras as defined in the real movement on this front in the run-up to
constitution.” the election. Five months is not enough time
for Brazil’s government to do much more than
Major election issue decide to study privatisation. Nevertheless, Bra-
It remains to be seen whether such thunder- zilian voters – and investors in Brazil’s energy
ing denunciations will help Bolsonaro gain the sector – will probably be hearing a great deal
support he needs to win re-election later this from Bolsonaro about Petrobras in the near
year. Earlier this week, the MDA polling agency term. Indeed, the president may end up sparring
said a survey commissioned by the transpor- with Lula over the question of whether privatisa-
tation group CNT showed that Lula’s lead over tion or tighter state control is the best way to help
the incumbent president in opinion polls had consumers beset by rising fuel prices. ™

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