Minister announces change in fuel prices and irritates Petrobras – 05/04/2023 – Market

Statements by the Minister of Mines and Energy, Alexandre Silveira, about a change in the fuel price policy this Wednesday (5) irritated the leadership of Petrobras, which has been under attack by the ministry since the beginning of its management.

Silveira announced in an interview with Globonews that the state-owned company will change its commercial policy after the election of the new council and even coined a name for the new model, PCI (internal competitiveness price), which, according to him, would reduce the price of diesel by up to BRL 0.25 per liter.

He also said that Petrobras has to fulfill its social function and act as a cushion to cushion abrupt variations in international oil prices, such as the one motivated by the production cut announced by exporting countries on Sunday (2).

“The import parity price [que simula quanto custa para importar os produtos] it’s a real absurdity”, said the minister. “We have to have what I’ve been calling PCI, which is the price of internal competitiveness.”

Silveira said he respected Petrobras’ governance and its legal nature, but stressed that the company is controlled by the Union and “has to work fulfilling its social function”. “We have to make this discussion quickly. Petrobras is already oriented in this direction”, he stated.

Although the change in the pricing policy is already among the priorities of the management indicated by President Luiz Inácio Lula da Silva (PT), the statements took the company’s leadership by surprise, both the direction and the board of directors.

Executives heard by Sheet say they are unaware of the minister’s proposal and complain about government interference in the company, for failing to comply with internal procedures for approving and disclosing strategic decisions.

In the early afternoon, Petrobras confirmed in a note that “it has not received any proposal from the Ministry of Mines and Energy” and that any price policy proposals “will be communicated to the market in due course, and conducted by the company’s usual internal governance mechanisms”.

A change in the company’s commercial policy must be discussed by the board and endorsed by the board. Afterwards, it must be announced to the market in a material fact, to guarantee equal access to information.

One adviser says that the Lula government has been repeating common abuses during the Jair Bolsonaro government, which is the target of lawsuits at the CVM (Securities and Exchange Commission) for anticipating the company’s decisions —in some cases, incorrectly.

The clashes between Silveira and the management appointed by Lula for the state-owned company began with the MME’s appointment to renew the company’s board of directors. The minister’s list was criticized both internally and in unions that support the Jean Paul Prates administration.

Speaking to Globonews, the minister said that the strategic changes at the company are supported by Lula, who attended the first meeting of the CNPE (National Council for Energy Policy) last month, which gave rise to projects to boost oil and gas production in the country.

The president, stated “gave a clear line”. “Petrobras and our government are going to work to increasingly reduce the impact of fuel prices on inflation”.