Petrobras: understand the split between government and management that could result in the dismissal of Jean Paul Prates

[ad_1]

Statements by the Minister of Mines and Energy, Alexandre Silveira, reignited the disagreement with the company’s president revealed by the case of withholding extraordinary dividends at the beginning of the month. The ‘tug of war’ will be refereed by President Luiz Inácio Lula da Silva (PT). The Minister of Mines and Energy, Alexandre Silveira, and, in the foreground, the president of Petrobras, Jean Paul Prates Fabio Rodrigues-Pozzebom/ Agência Brasil The president of Petrobras, Jean Paul Prates, goes through a new “frying” process and His position was threatened again this week, after yet another disagreement with the Minister of Mines and Energy, Alexandre Silveira. The subject, once again, is the distribution of the company’s extraordinary dividends. Dividends are amounts paid to shareholders based on the company’s profits. The non-payment of extraordinary dividends in March generated discomfort in the market, because it was interpreted as political interference by the government in the state-owned company. Silveira launched an offensive at the beginning of the week, when asked about the matter in an interview with GloboNews. The minister stated that he is “extremely concerned and even outraged” by accusations of interventionism at Petrobras. He also said that the government exercised its right to discuss with the advisors appointed by the Executive “the correct allocation of extraordinary dividends”. “We cannot admit that Petrobras has the sole and exclusive objective of making exorbitant profits to be able to distribute to its shareholders,” said Silveira. “We cannot fail to monitor, for example, what the Petrobras board of directors is doing from the point of view of fulfilling its investment plan approved by the Board of Directors. Because the main objective of President Lula’s government is to take care of people”, he continued. Alexandre Silveira: Petrobras cannot have the sole objective of “making exorbitant profits” Prates did not like the minister’s statements, and began demanding protection. From then on, a series of events have unfolded behind the scenes. This is a tug of war that will be refereed by President Luiz Inácio Lula da Silva (PT). What is known so far is the following: The discussion about dividends continues, despite the government having decided to distribute another part of the amounts. This must still be ratified at a company meeting; Still, Prates is in danger in the position. The assessment is that the wear is irreversible; The president of Petrobras has the support of the Minister of Finance, Fernando Haddad, and the financial market; Wings of the government are against permanence, and ask for changes so that Petrobras does not remunerate shareholders instead of investing; To organize the information, g1 prepared a guide. In addition to what was said publicly, this report includes findings from the blogs of Valdo Cruz, Julia Duailibi, Andréia Sadi and Ana Flor. See below, point by point. Camarotti says that Lula has already asked Mercadante to head Petrobras. What is the difference between Prates and the government? The president of Petrobras, Jean Paul Prates, and the Minister of Mines and Energy, Alexandre Silveira, never got along, and have differed since the beginning of the government over the direction of Petrobras. Some of the public barbs exchanged between Prates and Silveira, for example, date back to June last year, with technical disagreements over the use of natural gas reinjected by Petrobras. The clashes gained even more strength amid the different opinions of the minister and Prates on the state-owned company’s pricing policy, which was changed in May last year. The split was only more exposed with the dividend crisis. In early March, Petrobras shares plummeted 10% on the Brazilian stock exchange, after the company frustrated analysts’ expectations by not distributing extraordinary dividends to shareholders. The announcement caused Petrobras to lose more than R$55.3 billion in market value, and behind the scenes of the decision ended up raising rumors about a possible change of president at the state-owned company. Prates did not agree with the complete retention of extraordinary dividends and had agreed to transfer half the amount. Prates’ proposal was to distribute 50% of the extraordinary dividends now and the rest later. The proposal was not even put to a vote: the board only analyzed the alternatives of distributing the entire amount (as minority shareholders defended) or retaining the entire amount (as the government defended). Prates abstained from the vote. The government understands that it is positive to show the market that Petrobras has a lot of cash on hand, to obtain loans at good rates. Petrobras wants to disburse more capital in 2024 and 2025 for investments foreseen in the company’s strategic plan. After the turbulence of the week, Silveira and Prates aligned their hands, responding to Lula’s request. But this week, the issue was reignited with the minister’s interview. Prates understands that the “ceasefire” agreement has been broken. Ana Flor: Change in the decision to pay Petrobras dividends brings problems for the Ministry of Finance Who is against Prates staying? Prates is under pressure from members of the government, party leaders and even allied parties. The pressure against Prates comes from Centrão — which seeks to place someone more aligned with the group in the position — and from a wing of the government, which defends the name of Aloizio Mercadante, now president of the National Bank for Social Development (BNDES). President Lula even sounded out Mercadante, who responded that if he is called up, he will take over. He has a good relationship with Prates and sought him out to clarify that he is not moving to overthrow him. For Prates, the war and “invention of crises” have a single objective: to overthrow him from command of the state-owned company. Allies interpret that Silveira is not alone in frying, and there is support in Palácio do Planalto and PT. Prates repeats that his mission is to shield the state-owned company from political interests. His expectation, according to interlocutors, is that President Lula will decide what to do about the greed surrounding his vacancy. Prates was President Lula’s choice and praised by him after he ended the PPI, reducing inflationary pressures from gasoline and diesel prices, and thereby calming truck drivers. Now, he is facing criticism because he would not be making the investments that the government wants in the state-owned company. Prates wants to hear from Lula what he needs to do. Maintain its investment policy, of US$102 billion between 2024 and 2028, which could generate 280 thousand direct and indirect jobs, or leave the company because Palácio do Planalto does not agree with the way it is being run. Members of Palácio do Planalto assess that there was a “sequence of errors” by Prates in recent weeks that anticipated the possible replacement in command of the company. An interlocutor of those closest to the president assesses that it is “very difficult and unlikely” that Prates will be able to reverse his deterioration with Lula, who was angered by the public demand for a meeting. Petrobras: understand the dividend controversy Who is in favor of Prates staying? As soon as the dividend crisis broke, Prates received support from the Minister of Finance, Fernando Haddad. The reason is simple: with the need to increase revenue, the minister welcomes the transfer of dividends from the company to the Treasury. Furthermore, the financial market supports Prates remaining in charge of Petrobras, even after criticism for changing the state-owned company’s pricing policy. The president’s team defends itself by listing the results already achieved by the state-owned company during its administration, and does not agree with the criticism that it is failing to invest in the energy transition. This Thursday, Prates mocked rumors on a social network that he might leave his position. On X (formerly Twitter), he published an image of what would be a conversation in which he appears to answer a question about whether he would leave the company “I think after 8:02 pm. He’s going to get married and have dinner… And tomorrow at 7:09 am he’ll be back at the Company, as he always has a full schedule.” Behind the scenes, however, Prates has shown irritation with the pressure that, according to him, would come from government ‘vultures’. The president of Petrobras sees Silveira’s name on the Petrobras board as a permanent crisis. Prates sees a disparity of forces in the council and, if there is no balance, there would be no point in him remaining, as a new crisis would be a matter of time. What ended the dividend issue? The decision on dividends should only be made on the 25th, at a meeting of the shareholders’ meeting. But the government now wants Petrobras to pay extraordinary dividends. What changed the scenario was the perception that the Treasury will need more resources to maintain the hope of zero deficit in 2024. The government decided that half of the dividends will be paid — a value of around R$20 billion. With the 37% stake, around R$7.4 billion would enter the cash flow. And, by the end of the year, the other half may be paid.

[ad_2]

Source link