Bolsonaro Government Pressures Petrobras to Lower Diesel and Other Fuel Prices, While Also Seeking an Increase in State-Owned Company’s Dividends

In The Midst Of An Instability Scenario In Fuel Prices And The Brazilian Electoral Race, The Bolsonaro Government Is Now Pressuring Petrobras To Lower Diesel Prices And Seeking More Dividends With The Anticipation Of 2023 Values.

The Conflicts Between The Bolsonaro Government And Petrobras Escalated This Wednesday (07/27), And The President Continues To Press The State-Owned Company For A Reduction In Diesel Prices Passed On To Refineries. Citing A Drop In International Fuel Prices fuel. Furthermore, The Government Is Now Seeking To Increase The Dividends Paid By The Company, Including An Anticipation Of 2023 Values As A Way To Navigate The Instability In The National Market.

Petrobras Is Pressured By The Bolsonaro Government To Reduce Diesel Prices At Its Refineries Amid An Instability Scenario In The Fuel Market

The Fuel Scenario In Brazil Has Been Facing Significant Fluctuations Over The Last Few Months, Amid The Adjustments Made By Petrobras And The High Prices Of Crude Oil In The Global Market. And In This Context Of Instability, The Government Of President Jair Bolsonaro Is Now Pressuring The State-Owned Company To Decrease The Price It Charges For Fuel At Its Refineries By At Least 5% As A Way To Address The High Fuel Prices In The Country.

The Main Justification Of The Government For Pressuring The Diesel Prices In Brazil Is The Drop In International Fuel Prices, Even With The Ongoing Instability In The Global Market.

Additionally, According To Abicom, Which Represents Importers, The Price Of Diesel Sold By The State-Owned Company Was 29 Cents—About 5%—Above The Import Parity Price (IPP) At The Close Of The Market Last Friday. Although Abicom Believes This Year Will Be Challenging To Maintain A Good Margin For Reducing Prices, The Association Still Holds That It Is Possible To Lower Prices.

Another Issue That The Bolsonaro Government Is Trying To Solve By Pressuring The State-Owned Company To Reduce Diesel Prices At The Refineries Is The Disparity Of prices Between Diesel And Gasoline. Currently, The Price Of Diesel Is R$ 7.55 According To ANP, Which Is R$ 1.66 More Expensive Than The Price Of Gasoline Nationwide. And Even After The Reduction Of ICMS And Other Tax Benefits From The Government To Lower The Price, The Decrease Has Been Only 1.7% In The Last Four Weeks.

Federal Government Seeks More Dividends From State-Owned Companies And Petrobras To Consider Anticipation Of Values To The State In Meeting Next Thursday

In Addition To Strongly Pressuring Petrobras Regarding The Reduction Of Diesel Prices At The Company’s Refineries, The Bolsonaro Government Is Now Seeking That Petrobras, BNDES, Banco Do Brasil, And Caixa Anticipate Part Of The Dividends Paid In 2023. This Is The Main Strategy Of The State To Mitigate The Strong Impact That The PEC Das Bondades Had On The National Market.

The PEC Established A State Of Emergency And Will Allow The Government To Disburse R$ 41.25 Billion, Mainly In Social Benefits, On The Eve Of The Elections. Thus, Anticipating Petrobras And Other State-Owned Companies’ Dividends For The Year 2022 Aims To Address The Country’s Financial Deficit This Year. However, It Will Make The Financial Situation Of The Country More Difficult Next Year, Potentially Leading To A Complicated Management Under Another Government.

Finally, Petrobras Stated That It Received A Letter From The Special Secretary Of The Treasury And Budget Of The Ministry Of Economy Requesting The Anticipation Of Dividends. The Company Will Gather Its Board Of Directors To Decide What Measures Will Be Taken Next Thursday.