Brazil: Bolsonaro takes responsibility and replaces Petrobras president over high fuel prices

RIO DE JANEIRO, BRAZIL – Brazilian President Jair Bolsonaro, who has been expressing dissatisfaction with fuel price increases for several weeks, announced Monday his decision to replace the president of state oil company Petrobras, who has been in office for less than a year.

The Ministry of Mines and Energy said in a statement that the government, as the oil company’s majority shareholder, sent a communiqué to Petrobras on Monday with a list of the names of nine members it proposes for the company’s board of directors, including the new candidate for president, who will replace reserve general Joaquim Silva e Luna.

“The list presents Mr. Rodolfo Landim as a candidate for Chairman of the Board of Directors and Mr. Adriano Pires for Chairman of the Company,” the statement said.

Although the government had previously announced its decision to renew the oil company’s board of directors and appoint Landim as the new chairman, the decision to present a new candidate for the presidency of Petrobras was not foreseen.

Since last week, however, press reports have indicated that Bolsonaro wants to replace the president of Brazil’s largest company because he is unhappy with the constant increases in fuel prices that have pushed inflation to 10.54% year-on-year, its highest level in six years, just six months before Brazil’s presidential election.

Petrobras, a state-controlled company whose shares trade on the São Paulo, New York, and Madrid stock exchanges, has set fuel prices in Brazil based on the international price of crude oil.

As the price of oil has remained above US$100 for several weeks due to the impact of the war between Russia and Ukraine, fuel prices have also skyrocketed in Brazil, with a strong negative effect on inflation.

In Silva e Luna’s 11 months in office, prices for gasoline in Brazil have risen 27%, and for diesel, the fuel most used by trucks and public transportation, 47%.

Silva e Luna, a military officer who enjoys Bolsonaro’s complete confidence, took over as chairman of the company last April partly because the far-right leader was unhappy with his predecessor, economist Roberto Castello Branco, who prioritized shareholders’ interests over those of the government.

However, because the company is listed on the stock exchange, Bolsonaro does not have the power to dismiss the president of Petrobras automatically and, therefore, must wait for the board of directors to meet and approve the government’s decisions the company’s main shareholder.

Board of directors meetings are scheduled for April 13 to vote on its renewal and the election of Landim as its chairman. However, the government has decided to change the guidelines and put the election of Adriano Pires as Petrobras’ new commander to a vote as well.

If the government’s request is approved, Silva e Luna will have to leave the company, as his name is not even listed among the candidates for the board of directors.

Landim, currently president of the famous Flamengo soccer club, has extensive experience in leadership positions at Petrobras and has served as president of BR, the company’s fuel distribution subsidiary, now privatized.

WHO IS THE FUTURE PRESIDENT OF PETROBRAS?

Economist Adriano Pires, Bolsonaro’s nominee for president of the state-owned company, is an energy specialist with over 30 years of experience in the sector, where he has a respected name.

Pires, who currently heads the Brazilian Infrastructure Center (CBIE), holds a Ph.D. in industrial economics from the University of Paris XIII and has worked as a consultant for the International Bank for Reconstruction and Development (IBRD) and the National Electricity Agency (Aneel) has recently served as a consultant to the National Agency for Petroleum, Natural Gas and Biofuels (ANP, the regulatory agency) in 2001.

The expert’s arrival at Petrobras would not necessarily solve the problem that cost Silva e Luna his head. His successor has publicly stated that he approves of the current fuel pricing policy.

However, the economist has defended the creation of a stabilization fund to avoid price transfers to consumers in times of sharply rising oil prices.