Petrobras is the target of dispute between government factions – 05/04/2023 – Vinicius Torres Freire

Luiz Inácio Lula da Silva wants quick changes at Petrobras. He is irritated by the matter, say close aides. He thinks that the government in general is slow, that it doesn’t “launch” investments and doesn’t “implement measures” as it wants.

It is possible that this is one reason why the Minister of Mines and Energy trampled on the direction of Petrobras. Alexandre Silveira even said how much the price of diesel will fall after the implementation of the policy he called “PCI” (Internal Competitive Price), in an interview with Globonews.

In addition to pleasing Lula, Silveira (from the PSD) works to have greater influence in the oil company, especially in the board of directors that will be elected, which irritates the new president of the company, Jean Paul Prates (from the PT), and his direction.

Prates is also in favor of greater government intervention in the company’s pricing policy. But he wants Silveira away.

Silveira cannot do these things: announce commercial decisions of a publicly traded company, for which he has no mandate. Jair Bolsonaro did these things. In theory, he should be prosecuted and punished. He doesn’t usually come up with anything. It’s a mess (by the way, will the Americanas case lead to anything?).

Did the minister receive privileged information? Did you pass it on to someone? Is the information regarding the pricing policy untrue? Just speculation by the minister? What else?

Petrobras released a note regarding Silveira’s talk: it was not informed of the price policy discussion.

He also wrote that: “Any proposals to change the Pricing Policy received from the controlling shareholder [governo] will be communicated to the market in a timely manner, and conducted by the company’s usual internal governance mechanisms”. That is, he reiterated that the company is subject to rules for disclosing relevant information.

Silveira reaffirmed that Petrobras will fulfill its social function, including that of containing inflation: it regulates prices, to some extent.

OK. The government can achieve such a thing. The state law needs to change a bit and the oil company statute a lot.

The state-owned law may be trampled on, with some soft talk and leniency by control bodies. Trampling the company’s bylaws can lead to further action, filed by directors or, more likely, shareholders.

But, anyway, the government has the power to change these norms in a correct, legal way. Suppose you do and price it. That is, to keep them below those of the international market. Among other problems, the government will collect less taxes and dividends.

In 2022, Petrobras paid in taxes and the like the equivalent of 10% of the federal government’s gross revenue (R$230 billion). To put the government’s accounts in order as provided for in Fernando Haddad’s plan, the government will need at least R$ 100 billion in extraordinary revenue, per year, until 2026, apart from big luck.

Strong price fixing by Petrobras could cause other problems. It could damage the company’s credit and, to boot, strangle the biofuel industry (as happened under Dilma Rousseff), which would be tabulated indirectly.

Besides, who’s going to invest in fuel (or anything else) if the government can control prices?

Difficult.

So, the extra investment, if it is viable, would be borne by the government, which has no money. In other cases, sectors, the government ends up giving money to private companies, in theory to invest or grow (as it wants to do again with automakers). That is, it gives subsidies, several of them “tortoises” (actually triceratops, the horned dinosaur), to friendly companies or with good lobbying.

tortoises. Those animals that the Minister of Finance wants to hunt.

PRESENT LINK: Did you like this text? Subscriber can release five free hits of any link per day. Just click the blue F below.