Brazil’s Government will propose a new pricing policy for Petrobras

By Pedro Rafael Vilela*

Brazilian Minister of Mines and Energy Alexandre Silveira said on Wednesday (5) that the Union, the main shareholder and controller of Petrobras, will propose a new pricing policy for the company to help “combat losses and inflationary bumps.”

“We will treat this with all rigor, care, and social sensitivity,” Silveira told journalists at the Planalto Palace after meeting President Luiz Inácio Lula da Silva.

According to the minister, the idea is that a new pricing policy will start to be discussed as soon as all the members of the company’s board of directors take office, which is planned for the end of this month.

“The general meeting, which will be held on the 27th, with the new board defined, both the Board of Directors and the Fiscal Council, the federal government, as the majority shareholder and controller of Petrobras, will discuss the best pricing policy for Petrobras to fulfill its social function, which is in the Constitution, is in the State Law,” he said.

Earlier, in a statement, Petrobras reaffirmed its commitment to the “practice of competitive prices and in balance with the domestic market,” avoiding the immediate transfer of external volatility caused by cyclical agents and fluctuations in the exchange rate.

The note was an indirect response to the minister’s statements in interviews.

OPEC

Alexandre Silveira defended a greater role for Petrobras to avoid high volatility in international fuel prices, and cited the recent decision of the world’s largest oil producers, gathered around the Organization of Petroleum Producing Countries (OPEC).

“We cannot [accept], for example, that the OPEC cartel can influence and crush the purchasing power of Brazilians.”

“Therefore, the government of President Lula will have a very clear line, we are majority shareholders, we will respect the company’s governance, its legal nature, but we will be vigorous in defending the interests of the Brazilian people,” he said.

Earlier this week, OPEC announced a cut in production of about 1 million barrels of oil per day after the product’s price fell to about US$70.

The measure will be in effect from May until the end of the year and should raise the price of a barrel.

DERIVATIVES

The minister also defended investments in the petroleum refining park in the country to increase self-sufficiency in derivatives, especially gasoline and diesel oil.

According to Silveira, Brazil currently imports 13% of the gasoline and 25% of the diesel consumed in the domestic market.

“In other words, we will have to become self-sufficient in gasoline and, in the medium term, in the diesel issue”, he stated, about the need to seek independence from the international price oscillations.

Silveira added that, for the federal government, Petrobras’ production costs, which are based on the Brazilian real, cannot be calculated in dollars, as the company’s current pricing policy.

“Petrobras produces in reais and cannot have its costs calculated in dollars. This makes no sense in our government,” he said.

*Editing by Nádia Franco

With information from Agência Brasil