Brazil govt won't touch Petrobras' fuel price policy – board member

Brazil's Jair Bolsonaro administration will not change Petrobras' current fuel price policy, Rosangela Buzanelli Torres (pictured), the workers' representative on the board of the federal oil company, told BNamericas. 

"There is no such possibility in this government because it has a commitment to that wing [of the market] that is profiting a lot," she said. 

Torres added that most board members represent the government, so it has ability to change the import parity pricing policy (PPI), which indexes domestic fuel prices to international oil and natural gas prices and the exchange rate variation.

This change is key for the formation of fair prices in the country, since only a portion of fuels is imported, she said.

"This policy doesn't fit, but the government should just freeze prices until it can improve its electoral performance. After that, if it wins the elections, it will find a way to recover," she said. 

On Tuesday, the board approved Caio Mário Paes de Andrade as the fourth president of Petrobras since Bolsonaro took office in 2019. Shareholders' approval remains pending, however.

A board member term continues until the next shareholders' meeting, which has not yet been scheduled, and that of company president until April 13, 2023.

Paes de Andrade's three predecessors left as Bolsonaro intensified criticism of the fuel price policy, which led to price rises, even though Petrobras maintained a diesel and gasoline lag relative to private importers. 

According to Torres, the successive leadership changes were part of a plan to distance Bolsonaro from the PPI and raise public discontent against Petrobras, facilitating the acceptance of a privatization.  

Paes de Andrade's appointment has been criticized because the former federal special secretary for de-bureaucratization, management and digital governance does not meet the requirements established under law or by the company's own rules, as he lacks experience in the oil and gas sector.  

Despite oil workers unions and minority shareholders trying to block Paes de Andrade via courts and regulator CVM, he will likely be confirmed. "The shareholders' meeting will have the final word, and the federal government has the majority there, so he’s likely to be confirmed," Torres said.  

According to Rogério Miranda, partner at law firm Schmidt, Valois, Miranda, Ferreira & Agel, Petrobras’ board has the legal and statutory prerogative to elect the CEO. But the requirements for the position and the legal impediments must be verified. 

"The corporations and state-owned companies acts expressly establish such elements, and impose rigor in their observance, which is why they are subject to confirmation upon the election of the director or at any time," he told BNamericas. 

"If the appointment of a board member and/or of the executive board is not in compliance with the legal requirements in the Brazilian state-run firms law, it may be legally questioned by the shareholder who understands that there was a breach of this legal requirement in the appointment of such person," added Marcelo Oliveira Mello, partner of MMA Legal and head of the firm's oil and gas area.

Bruno Komura, analyst at Ouro Preto Investimentos, said the approval of Paes de Andrade represents a risk to board members, considering his lack of qualifications. 

"The board members could be accused of doing some kind of meddling on behalf of the government," he told BNamericas. 

Although major pillars like the divestment plan or the fuel pricing policy won't change,"it may be that the fuel price readjustments will take longer to be implemented," Komura said.  

Fabrício Gonçalvez, CEO of Box Asset Management, said to change the PPI, the government would need to push for modifications of the company's current statute, approved in 2016. 

"But that would go against its own discourse of greater economic freedom," he told BNamericas.