Government changes speech and evaluates holding Petrobras’ price adjustment

The spike in oil prices in the wake of the conflict between Russia and Ukraine led the Jair Bolsonaro government (PL) to discuss internally and with the National Congress the possibility of temporarily holding Petrobras’ price adjustments.

After a record profit of R$ 106.6 billion recorded by the company in 2021, the government’s assessment is that it is possible to have “shareholder collaboration” to minimize the effects of the oil price on the price at the pumps.

Calculation is also political. Pre-candidates for the Planalto, such as ex-president Luiz Inácio Lula da Silva (PT) and ex-minister Ciro Gomes (PDT), have openly defended greater control over the prices charged by the state-owned company.

The solutions for the fuel will be discussed at a meeting at Palácio do Planalto, on Tuesday (8), between ministers Paulo Guedes (Economy), Bento Albuquerque (Mines and Energy), Ciro Nogueira (Casa Civil) and the president of the Central Bank , Roberto Campos Neto.

In this context, interlocutors of the president say that a temporary price containment now would be preferable to a later, more lasting pricing, in case one of Bolsonaro’s opponents wins the elections.

The opinion of the chief executive’s assistants is that the maintenance of Petrobras’ international price parity policy would strengthen opposition candidates, by forcing the company to promote readjustments of more than 20% in fuel.

Government officials also admit the possibility of activating the calamity button if the conflict has not ceased in three months – this period is considered a reasonable window to have an idea of ​​the course of the war, whether it will end or escalate.

In the event of this clause being activated, the government would have more freedom to increase spending, including through extraordinary credits (off the ceiling), while granting readjustments to civil servants would be prohibited.

On the political wing, there are supporters of the immediate declaration of calamity, since the price of a barrel of oil has already exceeded US$ 100 amid the war in Europe. A group of ministers believes that it would be possible to edit a provisional measure to create a fund to compensate for high fuel prices. The economic team, however, believes that this is not the time to resort to calamity, as it is necessary to monitor the unfolding of the conflict.

This Monday (7), the president even admitted the possibility of changes in Petrobras’ pricing policy.

“There’s a wrong legislation made back there that you have parity with the international price [dos combustíveis]. In other words, oil —what is taken from oil— takes into account the price outside Brazil. This cannot continue to happen,” Bolsonaro said during an interview with a radio station in Roraima.

The President has also defended the reduction of the company’s profit to contain the high in fuels.

Assistants to the Chief Executive say that he is sympathetic to the idea of ​​temporarily holding the readjustments and that, as a result, it is possible that Petrobras’ profit will be lower this year.

One of the bills in progress in the Federal Senate under the rapporteurship of Senator Jean Paul Prates (PT-RN) provides some guidelines for the policy of internal fuel prices, including the reduction of volatility. The government should not oppose the approval of this section, which would provide the basis for moving forward with the temporary lock.

Technicians point out, however, that the text is not exhaustive, and its adoption would depend on approval by Petrobras. In this sense, the appointment of Rodolfo Landim for the presidency of the state-owned company’s Board of Directors is considered an asset to advance the discussion.

According to a member of the government, the idea is to contain prices for a few months, to avoid that the excess appreciation of the barrel of oil – which already exceeds US$ 120 – puts too much burden on consumers’ pockets. This would be reasonable because part of the state-owned company’s costs are in reais, with no impact from fluctuations in the international market.

The expectation is that, at the end of the conflict, prices will not remain at these quotations. Therefore, there is no need to pass through each and every price movement to the pumps. Freezing the readjustments would be a “transitory and wartime condition”, according to a government source.

The possibility represents a shift in government discourse. In early 2021, Bolsonaro even said that he would never interfere in the company.

In an event at BTG, on February 23, the president linked the change in prices as something defended by his main political opponent, former president Lula (PT).

“What would you think if these measures were implemented: if we revoke the autonomy of the Central Bank, the labor reform, if the union tax returns, if we renationalize the companies that were privatized, if the government starts to interfere in the prices of Petrobras and energy, if we come to strengthen the MST”, he said at the event.

The Dilma Rousseff (PT) government was even accused of using Petrobras as a macroeconomic tool to control inflation. During PT’s period, the state-owned company did not pass on the increases resulting from price fluctuation abroad, which generated criticism about the impact on the company’s accounts.

The intervention ceased to exist after the government of Michel Temer (MDB), when the then president of Petrobras Pedro Parente implemented the price rule linked to values ​​traded abroad.

In practice, Petrobras has already held the pace of increases in fuel prices under the Bolsonaro government. The last adjustments in the prices of gasoline and diesel were made on January 12, that is, the values ​​practiced are already out of date. Within the government, there are those who cite that containment did not generate greater noise in the financial market.

In recent days, Bolsonaro has been advised by ministers from the political wing to come up with a solution. According to government sources, the president even discussed the fuel problem with the Minister of Economy, Paulo Guedes, over the weekend and also on Monday morning.

The head of Economy has avoided talking about the matter, but it should not be an obstacle to the proposal to temporarily freeze prices practiced by Petrobras. .

Behind the scenes, Guedes’ team has taken a stand against ideas that involve the use of money from the National Treasury to subsidize the price of diesel and gasoline.

Amid the escalation in oil prices, other government ministers returned to the charge with proposals for the Union to fund a subsidy using Petrobras dividend income and oil royalties. The idea would be to use the money to reimburse the company and other importers for not passing on the readjustments, in a model similar to that adopted by the Temer government in 2018 to circumvent the truck drivers’ strike.

In the evaluation of the economic team, the measure could generate an invoice of R$ 120 billion, compromising the spending ceiling, the main fiscal anchor of the government.

Interlocutors from the economic team privately assert that the government’s mission is to defend public accounts. In addition, there are government officials who say they would rather deal with the consequences of a temporary price freeze than the adverse effects of a bigger hole.

Already a structural solution, in the evaluation of the Economy, depends on the increase of competition in the fuel market (today concentrated in the hands of Petrobras) and the approval of a complementary bill that changes the collection of ICMS (Tax on the Circulation of Goods and Services ), to change the current rate (a percentage of an amount) to a fixed charge on the liter.

The bill is pending in the Federal Senate and should be voted on this week. There is an articulation by the government to include, in agreement with the Ministry of Economy, the exemption of PIS/Cofins on diesel. The measure should drain BRL 18 billion from public coffers and, according to internal calculations, would have an impact of up to BRL 0.50 on pumps.

​To try to reconcile the text, Senator Jean Paul Prates sent a letter to governors making himself available to talk about the projects.

In the document, the rapporteur assesses that the text that creates a compensation fund “is a good emergency and structural solution for the current and future moments of volatility in the international cost of oil, but that is not enough”.

In addition, he emphasizes that he does not see the same provision for dialogue with regard to the complementary bill that changes the ICMS calculation.