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Petrobras CEO replaced over fuel hikes

February 19, 2021

Jair Bolsonaro says there will be "changes" at the Brazilian oil giant over four recent price hikes. Truck drivers are angry at the rises that they see as unfair. The company says they are in line with market rates.

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Petrobras CEO Roberto Castello Branco
Petrobras CEO Roberto Castello Branco is under pressure to quitImage: picture-alliance/AP Photo/L. Correa

Brazilian President Jair Bolsonaro replaced the CEO of energy giant Petrobras with an army reserve officer on Friday.

"The government decided to appoint Joaquim Silva e Luna to fulfill a new mission, as...president of Petrobras, after closing the cycle, exceeding two years, of the current president Roberto Castello Branco," said a note from the Ministry of Mines and Energy, published by Bolsonaro on his Facebook account.

Branco faced pressure to resign on Friday afterBolsonaro vowed to make "changes" at the firm in which the government owns a controlling stake.

Bolsonaro accused the company's fuel prices of being too high, piling pressure on chief executive Roberto Castello Branco.

Petrobras CEO Roberto Castello Branco
Petrobras CEO Roberto Castello Branco is under pressure to quitImage: picture-alliance/AP Photo/L. Correa

His comments come after a strike by Brazilian truck drivers over the fourth diesel and gasoline hike of the year.

Truck strike forces president's hand

The president said that he would slash fuel taxes for the next two months to grant relief to the industry.

"I can announce that we will have changes, yes, inside Petrobras," Bolsonaro told journalists in Sertania late on Thursday in the northeast of the country. 

Jair Bolsonaro, the president of Bolsonaro
Bolsonaro says there will be 'changes' at the state-owned firmImage: Marcelo Camargo/Agência Brasil

Rows over fuel prices have forced changes in the firm's management in the past.

Pedro Parente, a former Petrobras chief executive, stepped down after a May 2018 truckers' strike.

But sources inside Petroleo Brasileiro SA, as the firm is formally known, say Castello Branco has no plans to step down.

"He won't give in and he does not plan to leave," Reuters quoted one source as saying. "There was a time when the board of directors was pro-government, and now it's independent."

Petrobras
The price of Petrobras slumped on FridayImage: Imago Images/Fotoarena/B. Rocha

Markets fret over Bolsonaro threats

Investors are jittery about possible interference from authorities. The price of shares in the company, in which the government holds a near 30% stake, fell by 6% on Friday.

The Fitch ratings agency said on Tuesday that it was maintaining its negative outlook for the firm, citing the "potential return of stronger political meddling."

Analysts at UBS said in a note to clients that the latest hike announced by the company on Thursday morning represented a 10% increase in gasoline prices and a 15% increase in diesel.

They said the four hikes amounted to the equivalent of 35% rise in less than two months. 

Price hike hits the poor

The price of gas canisters, which are used by many poor people, have also rocketed this year.

It has piled on more misery to those already worst affected by the coronavirus pandemic. 

Leftist former president Dilma Rousseff froze fuel prices several times in 2014 and 2015 despite the price of oil barrels increasing at the time. 

But that state intervention into Petrobras prices ended when Rousseff was impeached in 2016 and removed from office.

Now prices are fixed by the company according to market variations.

jf/msh (AP, AFP, Reuters)