New Minister of Mines and Energy says he will ask for studies to privatize Petrobras

In his first statement after being appointed to the post, the new Minister of Mines and Energy, Adolfo Sachsida, said this Wednesday (11) that he will request the start of studies for the privatization of Petrobras.

“As part of my first act, I also request the beginning of studies aimed at proposing the necessary legislative changes for the privatization of Petrobras”, he said.

The new minister made a point of highlighting that he has the support of President Jair Bolsonaro (PL) for his administration. “I have a very simple goal and direction. I make it clear that this goal, this objective and this direction were expressly supported by President Jair Bolsonaro.”

Sachsida stated that he will also ask Minister Paulo Guedes (Economy) to include PPSA (Pré-sal Petróleo SA) in the National Privatization Program, so that the government can evaluate alternatives for its privatization.

PPSA is the state-owned company responsible for marketing the portion of oil to which the Union is entitled in the sharing contracts signed with companies that explore the pre-salt layer.

The new minister’s liberal bet comes at a time of great pressure from the political wing for measures that ease the burden of fuel on consumers’ pockets.

Last Monday (9), Petrobras announced a new adjustment in the price of diesel. The average price of fuel increased by 8.87% at refineries, from R$4.51 to R$4.91 per liter. The transfer to consumers depends on commercial policies of distributors and gas stations.

The readjustment was expected by the market, given the escalation of international quotations in recent weeks, but it displeased the government and revived requests for the creation of a federal subsidy to lower prices.

In his statement, Sachsida did not directly cite the fuel price situation, although he did mention “geopolitical challenges”. Russia’s invasion of Ukraine contributed to boost oil and dollar quotations, leading to derivatives prices.

To tackle the problems, the new minister defended the adoption of structural measures and said he had “100%” Bolsonaro’s support and endorsement. “One-off measures have little or no impact, or the opposite impact than desired,” he warned, without explicitly mentioning requests for fuel subsidies.

Bolsonaro, who seeks re-election this year, has criticized Petrobras’ pricing policy. On Thursday (5), the president said that the company’s profit of R$ 44.5 billion in the first quarter of this year is a “rape” and an “absurdity”.

“Petrobras, we are at war. Petrobras, don’t raise the price of fuel anymore. Your profit is rape, it’s absurd. You can’t increase the price of fuel anymore”, he said during his weekly live.

The Chief Executive has already publicly said he wants to privatize the company, given the political wear and tear suffered by the government due to the readjustments. This week’s diesel price hike follows a mega-increase in fuel prices announced in March by the company.

To privatize Petrobras, the government needs a constitutional amendment, to be approved by the National Congress, to make the monopoly that the Union currently holds over oil more flexible.

Sachsida also defended the privatization of Eletrobras. “There is today a priority, an urgency in the Ministry of Mines and Energy, which has the support of President Jair Bolsonaro. We need to continue the process of capitalization of Eletrobras”, she said.

“It is essential to advance in the capitalization process, an important sign to attract more capital to Brazil and definitively show that Brazil is a safe haven for investments,” he said.

The company’s capitalization, scheduled for this year, is under the assessment of the TCU (Union Court of Auditors), which should give its opinion on the 18th.

The new minister also said he had confidence in the “partnership with the National Congress” to approve projects that change legal frameworks in the electricity sector and change the sharing regime, which governs pre-salt exploration contracts.

In the sharing regime, the company that wins the auction is the one that offers the Union the largest share of the oil explored during the contract period. Petrobras, in turn, has the right of first refusal and can exercise it in all pre-salt areas, with a minimum participation of 30% in the consortia.

“I am sure that, in partnership with the National Congress, with the leaders of the Chamber and Senate and the presidencies of the Chamber and Senate, we will pass important bills to improve our legal frameworks, improve legal certainty, giving the necessary predictability for private investment to flow more and more to Brazil,” he said.