Brazil’s President Does not Rule Out the Privatization of Petrobras

RIO DE JANEIRO, BRAZIL – President Jair Bolsonaro did not rule out the possibility of privatizing Petrobras, but said he would assess the proposal to be submitted by Economy Minister Paulo Guedes, and determine the measure’s “cost-benefit”.

“The aim is to open up Brazil,” he said in a conversation with journalists outside the Palácio da Alvorada.

“The government studies everything, we must prepare for anything,” he said. “Everything is raised; everything is discussed. You will have to analyze the cost-benefit, what is good for Brazil and what is not.”

Bolsonaro once again complained about Petrobras’ fuel prices at the pump, stating that he would like to know “why the price drops at the refinery and at not at the pump. If there is a cartel or not, I cannot tell, but this is a reality. It hasn’t dropped, and that’s that”, he criticized.

Brazil’s government is still conducting studies to decide whether to privatize Petrobras, said Minister Onyx Lorenzoni (Chief of Staff) on Wednesday, August 21st. He said the government had not yet decided to include Petrobras in the Investment Partnership Program (PPI) portfolio. When a company is included in the PPI, studies may be initiated to decide about its future privatization.

The company’s potential sale made the oil company’s shares climb almost six percent on the Wednesday session of the Brazilian Stock Exchange.

“The government is conducting studies and working objectively. Petrobras, as a whole, will undergo studies by the PPI [Investment Partnership Program] team, the Ministry of Mines and Energy, and the BNDES [National Bank for Economic and Social Development],” Onyx said during the announcement of state-owned companies and projects currently on the government’s divestment list.

“For all that it means, something very thorough will be done, such as the privatizations in the Bolsonaro government in this short space of time,” he said. “But we have a lot of work ahead of us.”

On August 15th, in Rio de Janeiro, Minister Paulo Guedes (Economy) said that the sale of Petrobras had not been ruled out by the government. “Privatizations will speed up,” the minister said. “Up ahead, you, Castello Branco [president of Petrobras], may do something surprising.”

Last Wednesday, the secretary of Privatization, Salim Mattar, said that attitudes are essential: “We are redefining the role of the state.”

On July 24th, Petrobras raised R$8.6 (US$2.15) billion from the sale of BR Distribuidora’s shares. As a result, the gas station subsidiary now holds more private than state-owned capital.

Petrobras achieved US$15 (R$60) billion in divestments in July with the completion of the secondary offer, according to the company’s president, Roberto Castello Branco.

The next asset to be privatized by Petrobras is the Liquigás liquefied gas distributor. The company will also review engineering and maintenance service contracts at its terminals, which until then needed to be done through a bidding process.