Petrol costs are rising
Petrobras, Brazil’s state-owned oil company, is once again in jeopardy, caught in the middle of a political stalemate over rising fuel costs.
Far-right According to polls, people blame President Jair Bolsonaro for double-digit inflation driven by rising fuel costs, which he is running for re-election in October.
Bolsonaro terminated Petrobras CEO Joaquim Silva e Luna last week, alleging that the price of gasoline was “unaffordable” and that it was a “crime” against Brazilians.
Fuel prices in Brazil have risen by 33% in the last year as a result of global market fluctuations, even as the economy recovers from the coronavirus outbreak.
The burden has been exacerbated by Russia’s war in Ukraine, which has resulted in a recent spike in fuel prices.
Following his resignation last week, Silva e Luna observed, “Manipulating tariff policy is like manipulating gravity.”
Meanwhile, inflation in Brazil has increased by more than 11% in a year, and three-quarters of Brazilians blame Bolsonaro for their dwindling wallets, according to polls.
Bolsonaro’s main rival, leftist former President Luiz Inacio Lula da Silva, has pledged to “Brazilianize the fuel price,” or tailor it to local conditions.
Lula, a former labour unionist and popular ex-president, is largely regarded as the election’s frontrunner.
– Make a fire sacrifice –
The future of Petrobras, which sets the price of gasoline at the pump, is highly dependant on the outcome of the October elections, which is in both men’s sights.
The company has hardly recovered from the Operation Car Wash corruption investigation, which resulted in the convictions of multiple top legislators and business executives for embezzling billions of dollars from the oil giant from 2014 to 2021.
Petrobras generated a record net profit of almost $20 billion in 2021, following a challenging year in 2020 due to the coronavirus epidemic.
The findings, however, were inadequate to satisfy political authorities.
Bolsonaro sacrificed Silva e Luna “to appease his electorate,” according to economist Gesner Oliveira.
The president had ousted Silva e Luna’s predecessor, Roberto Castello Branco, for similar reasons a year before.
Getting rid of the existing CEO, on the other hand, has proven to be more difficult than expected.
Bolsonaro’s pick, economist Adriano Pires, withdrew his name from the race this week due to a potential conflict of interest arising from his other employment as the CEO of an energy consulting firm.
Another presidential contender, Rodolfo Landim, quit to focus on his football club, Flamengo, of which he is president.
Several other possible candidates, according to Brazilian press, have declined the role.
On Wednesday, the government chose Jose Mauro Coelho, who was in charge of oil issues at the Ministry of Mines and Energy.
If shareholders approve his nomination at a meeting on April 13, he will become Petrobras’ 40th CEO in 68 years.
– ‘Tough economic situation’ –
Regardless of who is in control, there will be a lot of pressure from the top.
“This is a position that is under a lot of political pressure, and each firing is an easy political response to a difficult economic scenario,” Prospectiva expert Adriano Laureno told AFP.
Analysts think that Petrobras’ internal restrictions, which are publicly available on the New York and Sao Paulo stock exchanges, as well as Brazil’s reliance on imported oil, would prevent any drastic price changes.
“To limit price volatility, a stability fund may be formed,” Oliveira added. “However, a comprehensive change in tariff policy is not possible.”
Petrobras is also on the verge of being privatised, something Bolsonaro and several of his senior political allies embrace.
