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President Jair Bolsonaro reiterated his readiness to privatize part of Petrobras

October 27, 2021



Brazilian state oil giant Petrobras is coming under increasing pressure as the Latin American nation’s President Jair Bolsonaro reiterated his readiness to privatize part of the firm by diluting the government’s share. 

Brazilian President Jair Bolsonaro repeated on Monday Oct 25th that he is considering privatizing state-run oil giant Petrobras and a Senate leader said studies were already underway regarding the dilution of the government's share in the firm, news that helped boost the company's shares over 7%.


"This is on our radar," Bolsonaro said during a radio interview. "But privatizing a company is not just putting it on a shelf and whoever offers the highest bid takes it, it is very complicated."

Later in the day, Fernando Bezerra, the head of the government in the Senate, told press that house is studying the possibility of privatizing the company via a share sale. It is unclear if any bill clearing the way for such a move will be sent to Congress this year, he said. The government is more focused at present on the privatization of Correios, Brazil's federal mail service, Bezerra said.


Bolsonaro had first mentioned a potential privatization of Petroleo Brasileiro SA - as the company is formally known - earlier in October, indicating that he was frustrated for being blamed for fuel price increases.


Also on Monday, Petrobras announced it would raise diesel and gasoline prices at the refinery gate starting on Tuesday, following a spike in international oil prices and a sharp depreciation of Brazil's currency. The firm said it would raise gasoline prices by 7% to 3.19 reais ($0.5656) per liter, while diesel prices will rise 9% to 3.34 reais.


"Aligning our prices with international markets is especially relevant right now, as Petrobras has received atypical demand (from fuel distributors) for November," Petrobras said in a statement.

Taken together, the privatization chatter and fuel price hike helped boost Petrobras shares, which were up 7.1% in late afternoon trade in Sao Paulo, making it the biggest winner on the benchmark Bovespa equities index.


The company has become a hot political topic as energy costs have driven Brazil's annual inflation into double digits, hurting Bolsonaro's popularity ahead of next year's election.




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