Bolsonaro wants to privatise Brazil’s state-owned Petrobras
Last week, Brazilian President Jair Bolsonaro said that he wants to privatise Petrobras, the state-controlled oil company which is under political pressure to lower fuel prices.
Shares of Petroleo Brasileiro SA, as the Rio de Janeiro-based producer is known, extended a four-day surge in Sao Paulo following the remarks, outperforming the local equity gauge.
Petrobras shares rose 1.1% at 11 a.m. local time, while the benchmark Ibovespa index fell. Mr Bolsonaro didn’t elaborate on the privatisation comments, made during an interview streamed on his Facebook page.
Rising energy prices have eroded Mr Bolsonaro’s popularity ahead of re-election next year and put Petrobras under political scrutiny in a country with a history of subsidising fuel. Chief Executive Officer Joaquim Silva e Luna has been grilled in Congress over the surge in fuel prices, but has said the company will continue to adjust to international levels.
Oil in New York soared past US$81 a barrel on the 14th October after the International Energy Agency became the latest to say natural gas shortages are boosting demand for crude.
If Petrobras is privatised, it likely won’t happen anytime soon. Economy Minister Paulo Guedes said last month that Brazil plans to take the company private within a decade. He suggested on the 13th October that Petrobras could sell shares and use the proceeds for social programmes.
Privatising Petrobras, as well as state-run lender Banco do Brasil, would shield the companies from political interference. Despite naming a former general to run Petrobras, Mr Bolsonaro’s government has let the company be managed independently.
Source: WorldOil