(Reuters) – The sudden resignation of Petrobras’ CEO may speed up the accession of a government-backed candidate to the top job, four sources said, an appointment seen aimed at giving the state a greater say over fuel pricing in Latin America’s No. 1 economy.
On Monday, Petrobras (PETR4.SA) announced that Jose Mauro Coelho was stepping down as chief executive and from the Petrobras board after roughly two months on the job. Fernando Borges, head of the company’s exploration and production division, has replaced him on an interim basis. read more
Coelho’s resignation came amid increasingly severe criticism from President Jair Bolsonaro and other politicians who are upset about sky-high fuel prices, which have dragged down the government’s popularity during an election year. read more
Bolsonaro had already announced in May that he was replacing Coelho with Economy Ministry official Caio Paes de Andrade, but complexities related to company statutes and securities laws had significantly delayed the handover.
However, as Coelho resigned before he was formally replaced, the company’s board can legally nominate Andrade to the board and then to the CEO spot, said four sources close to the company’s board and legal department, who requested anonymity as they were not permitted to speak to the media.
That could potentially give the government greater control over the manner in which Petrobras prices its fuel – a jittery prospect for investors, but welcome news for many consumers who feel squeezed at the pump.
Andrade’s appointment to the board and CEO spots could happen as soon as this week, two of the people said. Petrobras’ CEO must also be a board member, so Paes must first be appointed to the board before becoming CEO, they added.
In a statement to Reuters, Petrobras pointed to Brazilian securities laws allowing the board to appoint a replacement following the resignation of a member. That appointee would remain in office until shareholders vote on the board’s composition at the next shareholders’ meeting, the company said.
Much remains unclear.
One of the sources, who is close to the government, predicted the board would meet within two to three days to appoint Andrade. But the board is riven between representatives of market shareholders and representatives of the government, so Andrade’s approval, while likely, is not guaranteed, said another source, who is familiar with the company’s internal legal deliberations.
Moreover, Andrade’s policies are largely unknown.
Though traditionally a supporter of free market economics, he will come in with a mandate to bring down fuel prices in Latin America’s top economy, while also ensuring that supplies do not dry up.
The right-wing Bolsonaro has deposed various Petrobras CEOs for failing to control rising fuel prices, but his hand-picked choices have previously ended up backing a free-market approach and opposing fuel-price controls
Andrade would be the sixth Petrobras CEO since Bolsonaro took office in 2019. While the market is wary of political interference and turnover at the state-run firm, those concerns appear increasingly priced in. read more
Brazil-listed preferred shares in the company fell 5% following Coelho’s resignation, but quickly regained ground to close up over 1% on Monday.