Petrobras Shares Drop in Wake of Bolsonaro's Plan to Name New CEO
By Jeffrey T. Lewis
SÃO PAULO -- Oil giant Petrobras lost almost a fifth of its
market value Monday after Brazil's President Jair Bolsonaro named
an army general to take over the company in an apparent bid to
control fuel prices, sparking a crisis of confidence in his
administration's commitment to free-market policies.
Mr. Bolsonaro's plans to appoint Joaquim Silva e Luna, who
served alongside the president decades ago under Brazil's military
dictatorship, came as a blow to the oil producer, which was
recently pushed to the brink of bankruptcy through government
intervention. The appointment must still be approved by the
state-controlled company's board at a meeting scheduled for Feb.
Shares in Petrobras fell nearly 20% in late afternoon trading on
Monday, and the Bovespa index fell more than 4%, with the Brazilian
real sliding more than 1% against the dollar.
"It's a complete disaster," said Mailson da Nóbrega, a Brazilian
economist and former finance minister.
He said Mr. Bolsonaro is increasingly ruling like a populist by
intervening in Latin America's largest company. "This creates
insecurity about other areas of the government...it's going to take
a long time for us to come back from this," he added.
Shares in Brazil's biggest power companies also slumped after
Mr. Bolsonaro told supporters over the weekend that he planned to
"stick his finger" in that sector too.
But it was Mr. Bolsonaro's naming of Mr. Silva e Luna, to
replace Roberto Castello Branco, a University of Chicago-educated
economist, that has prompted market turmoil in Brazil. His term was
to end on March 20, but the board was expected to extend it another
With unemployment above 14% and anger growing over Mr.
Bolsonaro's handling of a pandemic that has killed a quarter of a
million people in Brazil, the president has increasingly embraced
policies that entail big spending plans and heavy intrusion into
Under the rival leftist Workers' Party, Petrobras was used
between 2011 and 2016 to spend about $30 billion funding gasoline
and diesel subsidies to combat inflation. It also lost billions of
dollars to corruption in a scandal that ensnared company executives
and politicians, say investigators.
Speaking to crowds of supporters at a beach on Saturday, Mr.
Bolsonaro called Petrobras's management "cowards" for recent fuel
price rises, and Sunday accused the company of pandering to
investors and having "zero commitment to Brazil."
The president denied he was interfering in the company, saying
he was instead demanding greater "predictability and transparency,"
playing down the move.
Write to Jeffrey T. Lewis at email@example.com
(END) Dow Jones Newswires
February 22, 2021 15:39 ET (20:39 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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