Plan to maintain refineries with Petrobras collides with Cade and PT studies alternative

The future president of Petrobras, Senator Jean Paul Prates (PT-RN), is evaluating the possibility of breaking an agreement with Cade (Administrative Council for Economic Defense) to keep six refineries under the command of the oil company. The damage, however, can be so high that alternatives have been studied.

One of the solutions analyzed by those involved in the discussions is to sell the refineries covered by the agreement signed with Cade more than three years ago so that, with the money collected, other units can be built.

During the transition, the PT even asked Petrobras to stop the divestment plan. From this perspective, the end of the agreement with Cade became the only way to fulfill Lula’s campaign promise to expand local production of fuels to force a price drop, especially of gasoline and diesel.

However, if the plan goes ahead, Petrobras will again respond to a sanctioning process that was suspended with the signing of the agreement with Cade. The chances of the oil company being convicted of alleged abuse of economic power are great – the reason that led to the agreement at the beginning of the Jair Bolsonaro (PL) government.

The fine, the court technicians speculate, could be very high, and the damage to the company’s image immeasurable.

On the other hand, there is a way out, according to people who follow the discussions in the government: proceed with the sale of the remaining six refineries, as agreed with Cade, and use the amounts collected to finance the construction of new units in the same region.

In addition to complying with the agreement and increasing investments in the sector, as the government wishes, the measure would also increase competition in the sector. This is because the companies that bought these assets became regional monopolists and would be selling more expensive fuel to customers in the region, who have no other alternative to purchase the product.

These refineries, however, claim that this situation only occurs because they are being forced to buy the input from Petrobras itself, which charges more. Imports, also according to these companies, have become painful in the face of oil shortages in the world during the pandemic, which made them hostages of the state-owned company.

Since September 2022, Cade has been investigating the issue and Petrobras is in the crosshairs. The agency wants to know if the state-owned company prioritizes its refineries with lower prices – which would constitute discrimination.

Background

The agreement between Cade and Petrobras was signed in 2019 and imposed the sale of eight of the state’s 13 refineries, which would reduce the company’s market share to around 50%. Today it holds 98% of the market, according to Cade. The divestment plan should have been completed in 2021.

However, so far, only two refineries have had their sale completely completed, one in Amazonas and the other in Bahia.

The sale of a third, in Ceará, will be analyzed by Cade’s court after councilor Victor Fernandes disagreed with the decision of the SG (General Superintendence) of the body, which authorized the sale. The SG instructs the processes that are judged by the plenary.

Given the delay in disposing of the refineries, Petrobras had to ask Cade for more time to comply with the agreement, which was granted.

Agreement review

It is technically not possible to revise the terms of the agreement. Politically, the court also does not want to make any kind of exception because that would weaken what is considered to be an important instrument for curbing abusive market practices.

Through the so-called TCCs (Terms of Cessation of Conduct), the company collects a pecuniary contribution and undertakes to put an end to practices considered abusive. In exchange, the sanctioning process to which she responded is suspended. Once signed, this agreement becomes effective and is monitored by Cade. If there is non-compliance, it is canceled and the process returns to the court until it goes to trial.

In the case of the Petrobras refineries, the lawsuit was brought by a complaint made by Abicom, the association of fuel importers. They stated that the company sold fuel at prices much lower than the average practiced in other countries —the so-called international parity.

This difference is what has been maintaining price distortions, making Petrobras’ fuel cheaper than the competition’s. Although competing distributors of the state-owned company disagreed with the thesis that the high concentration (98%) led Petrobras to be a monopolist, Cade’s technical area saw elements that supported the opening of the process and that led, according to the technicians involved, to the condemnation at the time .

Currently, this subject has gained political connotations with the decision of former president Jair Bolsonaro (PL) to bring down fuel prices by reducing taxes, a measure that was adopted by Congress and that could help in the president’s reelection —who, even so, , was defeated by Lula.

The petista, who initially criticized the electoral bias measure, decided to maintain the tax reduction for another two months until Petrobras’ price policy is revised. The company’s future president, Jean Paul Prates, recently stated that he does not intend to intervene, but at the same time made it clear that he advocates changing the price policy regarding the so-called import parity.

For him, it makes no sense to talk about import parity when the fuel is being produced in the country.

As a sign that he is aware of the problems faced by the new government, Cade’s president, Alexandre Cordeiro, asked the SG to open an investigation to find out whether gas stations abusively raised fuel prices at the turn of the year.

The measure is in line with what the Minister of Justice, Flavio Dino, sent a letter questioning fuel distributors on the matter.

Cordeiro arrived at Cade in 2015, during the government of Dilma Rousseff (PT), on the recommendation of Senator Ciro Nogueira (PP). Since then, he has served as a counselor and general superintendent. He will hold the presidency of the autarchy until 2025.