August 14, 2019
Petrobras President Roberto Castello Branco told a hearing yesterday at the Senate Infrastructure Commission that the company will invest approximately $ 100 billion over the next 5 years. Asset divestitures, on the other hand, are expected to reach up to $ 35 billion in the period.
“These are choices. You take money from one place and put it in more profitable ones. It is the pursuit of the optimal investment that maximizes shareholder return,” said the president of the state company.
Castello Branco rejected the thesis that the current government is dismantling the state company. “We are not taking Petrobras apart, we are turning it into a better company. Investing in what is good. This is called portfolio management.”
He confirmed that, so far, $ 15.3 billion of the original divestment plan has been sold. The sale of the companies that make up the Pasadena refining system in the United States, which raised $ 562 million, was important more for the symbolism than the amount collected, as it was a “black page” for the country, he said. Following the sale of distributors in Paraguay, the president of Petrobras said the same should occur with fuel networks maintained in Uruguay and Colombia. “It makes no sense [to maintain],” he pointed out. Also included in the calculation is the sale of 90% of the interest in the Transportadora Associada de Gás (TAG). The group formed by Engie and Canadian fund Caisse de Dépôt et Placement du Québec (CDPQ) paid R $ 33.5 billion to Petrobras.
The sale of eight of the company’s 13 refineries is in strategic planning. The process was divided into two steps. The first is already under way, for the sale of Abreu e Lima (Pernambuco), Landulpho Alves (Bahia), President Getúlio Vargas (Paraná) and Alberto Pasqualini (Rio Grande do Sul). Castello Branco has ensured that there are a large number of potential buyers. “With regard to the first four refineries, I say there is great interest. The number exceeds two dozen interested,” he said.
Asked by the senators, Castello Branco said he would not use the resources to be obtained from the Transfer of Rights assignment to reduce the company’s debt. He appealed to the National Congress to approve the Proposed Constitutional Amendment that will authorize the Union to make a $ 9 billion payment in compensation to the state. Without these funds in the short term, he said, Petrobras will not be able to participate in the auction of the Transfer of Rights assignment, scheduled for November.
Regarding the current situation of the company – which he categorically said was “robbed by a criminal organization and practically dismantled”, causing reaction from PT senators -, the president said that, today, the payment of interest and debt services by Petrobras consumes 35% of cash flow, compared to 3% in competitors.
He stressed that the company does not need to own the infrastructure, but the services. “Petrobras was responsible for 98% of refining capacity, an anomaly,” he said, pondering that the company gained nothing from this dominance in the gas market. “You should abhor monopolies as I abhor.”
Another recurring question was about fuel price policy. For Castello Branco, the assessment that diesel is expensive in Brazil is not correct. “Brazil is not expensive country in diesel, it is below the global average. Of 160 countries, in more than 100 costs more than in Brazil,” he said. “In the case of gasoline, it is in line with the global average, sometimes below, sometimes above,” he said. In both cases, comparison charts were presented to the senators. The president of Petrobras assessed that the issue of diesel, in fact, is due to the growth of the fleet – a harmful effect of the policy of credit expansion of governments of the PT, in his opinion. “BNDES ‘irresponsible credit expansion increased the fleet by 47.3% between 2008 and 2017.”