Brazilian President Jair Bolsonaro said that the country’s state-controlled companies should fulfill a social function and any different understanding by their chief executives was unacceptable.
The president’s comments come after a disagreement on fuel prices at state-controlled oil producer Petrobras led Bolsonaro to announce the ousting of Petrobras CEO Roberto Castello Branco last week.
“A state-owned company, whichever it is, has to have its social vision,” Bolsonaro said at an event at the Itaipu hydroelectric dam, defending fuel price predictability. “We cannot admit a state-owned company chief executive who does not have this vision.”
Political interference with Petrobras’ pricing policy has long been a concern for the market since the company lost US$ 40 billion between 2011 and 2014 subsidizing fuels to control inflation under leftist president Dilma Rousseff.
In 2018, the company’s then-chief executive resigned when Brasilia stepped in to artificially lower fuel prices in response to a crippling nationwide trucker strike.
Fears of government intervention on fuel prices led Petrobras shares to tank 22% on the trade session following Bolsonaro’s announcement of the CEO replacement. Truck drivers are part of the president’s electoral base.
The sacking of Castello Branco is not a good omen for Latin America’s largest economy, rating agency Fitch warned, although it will not immediately hurt Brazil’s credit score.