Brazil's state-controlled Petrobras is defending its robust governance reforms post-Lava Jato and commitment to import price parity, just as presidential frontrunner Luiz Inacio Lula da Silva is pledging to dismantle the core of the company's market-based pricing.
With less than 10 months until the first round of the next presidential election, fuel prices have become a flashpoint for candidates offering solutions to a problem that, along with spiraling inflation, is eroding the purchasing power of Brazilian voters.
"We are not going to keep the price of gasoline in dollars," former president Lula wrote on social media this week. "It is important that shareholders receive their dividends when Petrobras makes a profit, but I cannot enrich the shareholder and impoverish the housewife who will buy a kilo of beans and pay more for gasoline."
Petrobras has made a series of gasoline and diesel price adjustments — the last on 12 January — that have become campaign fodder for both Lula and his right-wing counterpart, incumbent President Jair Bolsonaro.
Bolsonaro has also been critical of Petrobras' profits and has pursued various strategies for lowering unpopular pump prices, some that have raised concern of government meddling in the company's decision-making. His unexpected February 2021 decision to oust pro-market chief executive Roberto Castello Branco in favor of general Joaquim Silva e Luna immediately raised concern of government intervention. Those worries have faded somewhat with Silva e Luna's regular reassurance of the company's commitment to import price parity.
"We know the damage caused by artificial pricing," Silva e Luna said this week during a Credit Suisse event. Pricing aligned with international markets is necessary to ensure that imports, required to bridge a domestic supply gap, continue to flow into Brazil, he said.
Brazil's congress is now considering a constitutional amendment that would allow fuel taxes to be cut without offsets in spending or additional taxes. Part of the government's plan to tame inflation, the proposal has yet to be scheduled for voting.
Uncertainty over fuel pricing has had a chilling effect on Petrobras' plans to sell eight refineries, the core of a broader plan to open Brazil's refining sector.
Petrobras has only finalized one refinery sale, the $1.8bn sale of the 333,0000 b/d Mataripe refinery to Abu Dhabi's Mubadala. Two others are expected to close in 2022 and sales agreements for two more are expected in the first half of this year. The remaining three will only receive binding offers after the election.
