Brazilian oil producer Petrobras is plunged into turmoil after the country’s president, Jair Bolsonaro, suddenly announced a plan to replace his chief of staff with an army general following recent protests by trucks over fuel prices.
The right-wing populist leader announced on social media on Friday night that his government intends to remove Roberto Castello Branco from the top of the state-run group, indicating a rapid increase in a disagreement with the government.
His place is taken by Joaquim Silva e Luna, a general in the reserve force who was Minister of Defense under former President Michel Temer.
The ruling comes less than a day after Bolsonaro publicly criticized Castello Branco for raising fuel prices again, warning that there would be changes at Petrobras, with comments that the company’s São Paulo-listed preference shares were up 6.6 on Friday. percent dropped.
This is likely to raise international investors’ concerns about a more far-reaching approach to Brazil’s economy, and could cast doubt on the government’s stated intention to pursue privatization of other state-owned enterprises or shareholdings.
Petrobras said he had received a letter from the Ministry of Mines and Energy requesting an extraordinary general meeting for the appointment, adding that the CEO’s mandate expires on March 21.
The Brazilian state owns a 36.8 percent stake in Petrobras, but 50.5 percent of the voting rights. The news agency Reuters reported late Friday night that the company’s executive management was considering resigning en masse in the wake of the decision.
Petróleo Brasileiro, as the group is formally known, is seen as a test case for the pro-reform agenda of Economy Minister Paulo Guedes, who has largely struggled to bring about meaningful change since Bolsonaro’s government two years ago. entered.
Behind the sudden move to place the dismissal of Petrobras CEO was the company’s policy of aligning petrol and diesel prices with the international market. Threats of nationwide strikes by truck drivers earlier this year were partially dismissed after Bolsonaro, a former army captain, personally stepped in to calm the situation.
But Petrobras’ decision to raise fuel prices again this week has angered the president. He promised Thursday night to suspend the tax on diesel from March for two months.
When Castello Branco held the leading position at Petrobras two years ago, he promised to keep it free from political interference and told the Financial Times that ‘we do not want to return to this past’.
The management of the University of Chicago, which is trained, estimates that efforts by the former government of Dilma Rousseff to subsidize diesel prices cost about $ 40 billion for Petrobras, which contributes significantly to a pile of debt that the company is still struggling to reduce.
According to analysts, maintaining and strengthening the independence of the board of directors is crucial to restoring the company’s image in the eyes of investors.
For much of the past decade, it has been at the center of the Brazilian corruption investigation into Car Wash, which has uncovered an extensive contract-for-return scheme involving numerous politicians and businessmen, including executives at Petrobras.
‘[The removal of Castello Branco] will have a huge impact on the value of the company and on the credibility in the medium and long term, ”said Claudio Porto, founder of energy consultant Macroplan. “The prediction is a very long-lasting bias.”
Additional reporting by Carolina Pulice