Brazil's federal auditing court (TCU) asked state-controlled oil company Petrobras to temporarily suspend its divestiture program while the court reviews asset sales procedures. The decision could delay Petrobras efforts to raise US$15.1 billion from asset sales by the end of 2016 as a way to reduce its huge debt -- the largest in the global oil industry.
The company wants to raise US$19.5 billion more in 2017 and 2018.
The court said five ongoing Petrobras asset sales that are nearing conclusion can be finalized, accounting for around US$3.3 billion, but asked the company to refrain from signing any new sale plans 'until new order.' There is no date set for a final ruling by the court.
TCU's decision follows recommendations from its experts about procedures used by Petrobras, on the asset sales. According to the decision published this week, the court thinks the company should be much more transparent in its divestiture program as it is a state-controlled entity.
Laws governing public entities in Brazil require ample disclosure of business information.
There is a debate among lawyers regarding to what degree those laws would apply to a company that is also owned by private investors, as is the case with Petrobras.
Petrobras said the TCU ruling is positive in a sense, since it allows the firm to close deals that were near completion. It said it plans to comply with the court's determination.
The company is already reviewing its divestment procedures and is committed to following the court's recommendations for improvements, Petrobras said in a statement.
Petrobras reaffirmed its targets to raise US$15.1 billion by end-2016 and US$19.5 billion more in the next two years.
Although the TCU said it would let Petrobras conclude deals that are already well-advanced, it is not clear how many of the recent transactions the oil company would be able to finalize if it strictly follows the court's order.