Petrobras loses BRL 14 billion in one year with price policy

Petrobras’ delay in carrying out price adjustments to compensate for the rise in oil and discounts on these increases caused losses of at least BRL 18.7 billion in revenue in the last two years and BRL 13.9 billion in the 12-month period to date. February 2022.

Since the beginning of this year, the pace of losses has doubled. The monthly average last year was R$ 875 million; rose to R$ 1.75 billion.

In the first two months of the year alone, when the barrel of Brent oil — an input for refining gasoline and diesel — broke the US$ 100 barrier, the accumulated price lag was R$ 3.5 billion.

The estimate was made by sheet based on data published by the ANP (National Petroleum Agency) and by Petrobras, following the methodology of Abicom (Brazilian Association of Fuel Importers).

To calculate the lag, the entity considers the difference between the amount charged by Petrobras to distributors and the PPI (International Parity Price) — which reflects the international cost and is paid by importers operating in the country.

The survey was only possible in six states (São Paulo, Paraná, Bahia, Pernambuco, Maranhão and Amazonas). Market estimates indicate that these locations concentrate around 75% of national consumption. In other words, across the country. Petrobras’ losses with the lag are greater.

According to the ANP, Petrobras’ sales in the local market corresponded to 81% of the total until February this year — an index that varies monthly.

With the surge in oil, importers —represented by Abicom— did not make purchases this year, especially gasoline. The few imports were restricted to diesel, a product that has other local suppliers besides Petrobras. Until last year, they concentrated around 10% of the imported volume of fuel, which circulated especially in the North and Northeast.

In the last two years, the gap between international prices and those of Petrobras varied between 30% and 40%, depending on the fuel, according to the survey.

According to available data, the oil company has always delayed the transfer of cost increases, in addition to readjusting prices at a lower level than the international quotation.

In Manaus (AM), for example, the price of a liter of gasoline charged by Petrobras was R$ 3.18 from the beginning of January this year until February 24, the day of the invasion of Ukraine by Russia — when the price soared.

During this period, the international price practiced by importers at the port of Itacoatiara, near Manaus, increased week by week, starting from R$ 3.50 to R$ 4.26 per liter.

Petrobras only readjusted it to R$3.79 in mid-March, when the international price of gasoline changed to R$3.89 in the Amazon port.

This dynamic also prevailed in Araucária (PR), where the liter of gasoline stood at R$3.24 from January to March, when it rose to R$3.85. The price charged at the port of Paranaguá, however, rose from R$3.37 to R$4.35. Today it is R$ 3.95, still above the amount charged by Petrobras.

The figures show that the pass-through was severe in the weeks after Russia’s invasion of Ukraine, which pushed oil to $140 a barrel.

After almost two months of containing cost pass-throughs, Petrobras announced a mega-increase to distributors earlier this month.

Soon after, a process of frying the president of the state-owned company, General Joaquim Silva e Luna, began, criticized by President Jair Bolsonaro for being “insensitive to Brazilians” by readjusting prices at a time when inflation is high.

Minority shareholders of the company reacted and sent an alert to the Civil House of the Presidency of the Republic that they could go to court demanding compensation if there was interference with price transfers.

The company’s statute provides that the government can ask Petrobras to freeze prices, but requires it to be compensated by the Union. So far, however, there has been no announcement of any kind of compensation.

Alone, the company generates the equivalent of 13% of the national GDP. For every BRL 1 invested by the company, another BRL 3 is generated in wealth, according to calculations by the LCA consultancy.

Other mega-companies have weight in the generation of wealth in the country, but Petrobras jumps in importance because, in addition to being controlled by the Union, its products are the basis for the production of other goods and services whose prices are used to calculate inflation measured by the IPCA. . Its political component is therefore undeniable.

Understand the political fair game involving Petrobras

With the rise in oil prices, prices have escalated, which contributed to inflation breaking the target ceiling set by the Central Bank at 5% this year. The IPCA accumulated in 12 months until February is 10.54%, according to the IBGE.

For this reason, Jair Bolsonaro has been pressing the state-owned company’s management to freeze or further dam the fuel readjustments.

Bolsonaro was waiting for the announcement of the latest readjustment after the approval by Congress of a bill that defined the reduction of ICMS levied on fuels.

But Silva e Luna released the adjustment before that, which upset Bolsonaro and his closest team. With the markdown at the pumps, consumers in Acre had to fill up paying R$ 11 per liter of gasoline.

The president’s discomfort has reignited political disputes over a change in command of Petrobras at a time when Jair Bolsonaro (PL) seeks re-election.

In addition to having to face popularity damage with this rise, Bolsonaro also has another challenge: avoiding the escalation of inflation, which erodes the purchasing power of Brazilians, another ingredient of his wear.

Planalto advisers claim that Bolsonaro directly asked Silva and Luna to freeze prices or reduce prices as soon as possible – something that was not accepted by the general.

In addition to pressure from the Planalto, Petrobras is also criticized by the Ministry of Economy, which demands from Cade (Administrative Council for Economic Defense) a tougher conduct in relation to the agreement signed with the company and which provided for the opening of the market.

Cade informed that it has an investigation underway and will accelerate the pace of investigations into the company’s policy.

According to the Economy, this does not mean government interference in the company. The team led by Minister Paulo Guedes argues that the government cannot change the company’s pricing policy.

Guedes resists seeing approved a project defended by the Ministry of Mines and Energy – to which Petrobras is linked – to create a direct subsidy to at least contain the rise in fuel prices.

This idea would cost R$ 14.9 billion in revenues to be waived by the Union’s coffers to zero PIS/Cofins rates on diesel.

Although it does not make frontal attacks on Petrobras’ pricing policy, the Ministry of Economy criticizes the way in which the state-owned company accounts – and passes on to the refineries – its import costs. The right thing, according to the ministry, would be to consider the FOB price (free of freight or insurance costs), as other importers do.

In the evaluation of the economic team, as the company began to import more to meet domestic demand, the company’s prices and profit rose to historic levels – which was R$ 106.6 billion, in 2021.

International quotation is just one of the criteria for price, says state

Through its advisory, Petrobras said that the PPI serves only as a reference for the value of products in the Brazilian market, which is a net importer of fuels.

The level of Petrobras’ market share and the efficient flow of its internal production are the other “decision elements for price adjustment or maintenance”.

Regarding the frequency of readjustments, “a period with very low volatility and another with very high volatility, with even daily readjustments” has been experienced.

“Today, we are at a level that provides a balance with the market, observing business interest, but avoiding passing on to domestic prices the volatilities of international quotations and exchange rates caused by conjunctural events.”

According to the company, this positioning, in practice since 2019, contributed to the achievement of results, highlighting the increase in Ebitda; Moody’s credit rating upgrade by 1 notch, from “Ba2” to “Ba1”, with stable outlook; distribution of 60% of its free cash flow to shareholders, 37% of which to the Federal Government, totaling a contribution of more than R$230 billion in taxes, dividends and social responsibility for the country.

The war brought volatility to the price of oil, but Petrobras decided not to immediately pass on the volatility, carrying out a daily monitoring of prices.

“Only on March 11, after prices were observed at consistently high levels, Petrobras implemented adjustments in its sales prices to distributors of gasoline, diesel and LPG.”