Brazilian President Jair Bolsonaro on Friday sacked a market-friendly economist as CEO of Petrobras and named a retired general to replace him, following on disputes over diesel prices that threatened a major teamsters stoppage.
In picking former Defense Minister Joaquim Silva e Luna to take over from Roberto Castello Branco, Bolsonaro is seeking to appeal to truck drivers, who threatened to go on strike at the beginning of the month due to recent increases in fuel prices.
Bolsonaro had said in a live broadcast on Thursday that he would make changes at Petrobras, which is 50.26% owned by Brazil’s government. He also promised to end federal taxes on diesel fuel over the next two months.
If confirmed by Petrobras’ board, Luna would become the first military man to hold the position at the oil company since 1989.
Petrobras stocks fell 6.6% at the Sao Paulo Stock Exchange on Friday as investors anticipated a change in the management of the oil giant.
I can announce that we will have changes, yes, inside Petrobras, Bolsonaro told journalists in Sertania in the northeast of the country.
Rows over fuel prices have forced changes in Petrobras management in the past. Pedro Parente, a former Petrobras chief executive, stepped down after a May 2018 truckers' strike
Fitch ratings agency said on Tuesday that it was maintaining its negative outlook for the firm, citing the potential return of stronger political meddling.
Analysts at UBS said in a note to clients that the latest hike announced by the company on Thursday morning represented a 10% increase in gasoline prices and a 15% increase in diesel.
They said the four hikes amounted to the equivalent of 35% rise in less than two months.
The price of cooking gas canisters, which are used by many poor people, have also rocketed this year. It has piled on more misery to those already worst affected by the coronavirus pandemic.
Removed leftist president Dilma Rousseff froze fuel prices several times in 2014 and 2015 despite the price of oil increasing at the time. But that state intervention into Petrobras prices ended when Rousseff was impeached in 2016 and removed from office.
Now prices are fixed by the company according to market variations.