MercoPress. South Atlantic News Agency

Bolsonaro poised to ensure the removal of Petrobras CEO

In a statement, Petrobras said it had called the meeting in response to a request by the nation's Mines and Energy Ministry

Brazilian president seems poised to win his controversial struggle over the removal of the country's giant oil and gas company Petrobras CEO, and replacement by a former Army general. In effect, Petrobras on Tuesday called an extraordinary shareholders' meeting, a move that all but guarantees the exit of CEO Roberto Castello Branco.

In a statement, Petrobras said it had called the meeting in response to a request by the nation's Mines and Energy Ministry. At the meeting, shareholders are expected to formalize the replacement of Castello Branco with Joaquim Silva e Luna, a general picked by President Jair Bolsonaro.

Petrobras' statement on Tuesday evening largely puts to bed the possibility of a protracted legal and political fight surrounding the CEO swap. Although seven of the 11 Petrobras board members are appointed by the government, most had remained loyal to the orthodox economist Castello Branco in recent weeks, even as he came under pressure from Bolsonaro, for the increase in fuel prices.

But shortly before the meeting, a vote on re-electing Castello Branco for another term was replaced with one setting up the shareholders meeting.

In the statement, Petrobras quoted the board as saying it “will continue to watch over governance standards at Petrobras, including what those standards say with respect to the pricing policies of the company's products.”

Bolsonaro criticized Castello Branco last week after a series of fuel price increases, spooking investors over a possible return to politically motivated pricing that hammered Petrobras' revenue over the past decade.

Bolsonaro on Tuesday told supporters there were “many things wrong” at Petrobras. “The new CEO will clean things up there,” he added.

Talk of a mass board resignation to protest against Castello Branco's replacement emerged last week, but has largely faded since Bolsonaro officially said on Friday he was appointing a new CEO.

Both the board of directors and executive management are expected to stay until at least the end of their terms - which for the management expires on March 20. Only isolated possible departures in the mid-term are being considered, the people said.

Luna, who has been running the giant Itaipu hydroelectric dam on Brazil's border with Paraguay, has already signed documents that will kick off the standard pre-hiring ethics scrutiny at state-owned Petrobras.

Under Brazilian law, an extraordinary shareholders meeting takes place 30 days after the board called for it. Following the meeting the board will likely require several days to go over compliance-related documentation before Silva e Luna is officially named CEO.

Brazil-listed preferred Petrobras shares closed up 12.17% on Tuesday, a day after plummeting 22%.