Petrobras shares tumble after CEO ousted

67
2
Petrobras shares tumble after CEO ousted

SAO PAULO Reuters - Shares of Brazil's state-owned oil company Petrobras plunged on Tuesday after the government ousted its chief executive for the second time in two months and signaled plans to change fuel pricing policy.

President Jair Bolsonaro has been railed against a series of fuel price increases by Petrobras, formally known as Petroleo Brasileiro SA, which have tracked a surge in global energy costs and added to double-digit inflation in Brazil.

As the war in Ukraine drags on and Brazil's October presidential election approaches, his government has taken a more aggressive stance on fuel prices because of the limited political interference during much of Bolsonaro's term.

In afternoon trade, preferred shares fell by 4.7% in Sao Paulo, a far worse than a 1.2% slide for Brazil's benchmark Bovespa equities index.

The president is anguished by rising fuel prices and the company's pricing policy is aligned with the views of a new energy minister who took office this month, according to the chief of staff of Bolsonaro, Ciro Nogueira.

Given the upcoming election and the risk of shortages if prices continue to decouple from global markets, analysts doubted that new management at Petrobras would be able to significantly change how the company's prices fuel domestically.

However, increased government interference in Petrobras affairs is a significant negative from a corporate governance perspective, according to analysts at Credit Suisse and UBS.

The government has changed Jos Mauro Coelho for Economy Ministry official Caio Mario Paes de Andrade after leaving Petrobras CEO Jos Mauro Coelho.

Under company bylaws, such a move triggers an extraordinary shareholders' meeting in which several board members could be swapped out.

Two weeks ago, after a series of fuel price hikes by Petrobras, Bolsonaro replaced his energy minister with another high-ranking Economy Ministry official, Adolfo Sachsida.

The pricing policy of Petrobras needs to be in line with the new minister, Nogueira said in a TV interview that the outgoing CEO Jose Mauro Coelho is more aligned with former Mines and Energy Minister Bento Albuquerque.

Last week, Petrobras management warned the government of diesel shortages this year if domestic prices don't track global markets, according to four sources and an internal presentation seen by Reuters.