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State-Owned Company Studies Opening Bidding to Reactivate Units Halted Since 2023 and Reduce External Dependency in the Sector.
Petrobras is considering launching a bidding process to hire a new company responsible for operating its fertilizer plants in Bahia and Sergipe. The units, currently leased to Unigel, have been idle since 2023. The goal of Petrobras is to resume the production of nitrogen fertilizers, strengthening national autonomy in a strategic sector for agribusiness.
This topic will be discussed this Thursday (18) in a meeting of the new board of the state-owned company, formed after a general shareholders’ meeting held this week.
Petrobras Plants Have Been Halted Since 2023
The fertilizer plants of Petrobras in Bahia and Sergipe were leased to Unigel in 2019 for a period of 10 years. However, both units halted operations in 2023. Unigel claimed that high natural gas costs made production unfeasible.
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In light of the shutdown, the federal government is pressuring the state-owned company to reactivate the plants and ensure the security of the agricultural input supply chain. Brazil imports about 85% of the fertilizers it consumes, which poses a risk to its competitiveness in agribusiness.
Petrobras Wants to Expand the Supply of National Fertilizers
In assessing the resumption of the fertilizer plants of Petrobras in Bahia and Sergipe, the current plan is to open a bidding process. This will allow companies with experience in the sector to compete for the operation of the units, with transparency and efficiency. Unigel, the current lessee, will also be able to participate.
A previous attempt to resume operations through a direct contract with Unigel was discarded after internal objections on the board and the risk of breaching governance rules. The TCU has already pointed out a risk of a loss of R$ 487 million if this agreement went ahead.
Fertilizers Are Strategic for National Sovereignty
The investment in the reactivation of the plants is strategic for Brazil, which is the fourth largest agricultural producer in the world, but still relies heavily on imported fertilizers, especially from Russia, Canada, and China.
The fertilizer plants of Petrobras in Bahia and Sergipe produce urea, ammonia, and other basic inputs for agriculture. The resumption may reduce costs for producers and increase the competitiveness of national production.
Expectation Is for a Decision in the Coming Weeks
Petrobras is still evaluating the legal and operational options to launch the bidding notice. If approved, the measure could enable the return of production as early as 2025. The federal government is closely monitoring the process, which aligns with the plan for the resumption of industrialization and energy sovereignty in the country.
The decision may also end a series of disputes with Unigel, which is currently engaged in arbitration processes related to the lease contract with Petrobras.
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