Petroleo Brasileiro SA, the world’s most indebted publicly traded crude producer, received support from Brazil’s Finance Minister Guido Mantega yesterday to raise gasoline prices, said a person familiar with the matter.
The Rio de Janeiro-based company known as Petrobras didn’t set a date or an amount for the increase at a board meeting in Brasilia, said the person, who asked not to be named because the information isn’t public. The company presented charts during the meeting based on an eight percent increase, the person said. Shares fell for a third day.
Petrobras, which booked $44 billion in operating losses from selling fuel at below-market prices during President Dilma Rousseff’s first term, is set to raise its subsidized refinery gate prices even after crude’s 25 percent plunge this year brought them more into line with international benchmarks. The decision comes after Rousseff won re-election by the narrowest margin in Brazil’s history and the central bank raised interest rates sooner than expected last week.
“It’s positive the government has given an approval for an increase in prices, that’s the wall we had in the past,” Lucas Brendler, an analyst at Geracao Futuro Corretora in Porto Alegre, Brazil, said in a phone interview. “We just need to know how much and how they will do it.”
Shares slumped 2.3 percent to 14.48 reais at 10:27 a.m. in Sao Paulo after Brent crude fell to a four-year low. Petrobras is the worst performing major oil company in the past four years losing 57 percent, data compiled by Bloomberg show.
Meeting Reconvened
Fuel-price increases “are not announced, they are carried out,” Chief Executive Officer Maria das Gracas Foster said when asked about the adjustment after yesterday’s board meeting. In a regulatory filing, the company said while gasoline and diesel price adjustments are often discussed by management and board there is no decision to report.
At the previous month’s board meeting Foster said the company needs at least a 10 percent increase in fuel prices, a person with knowledge of the matter said at the time.
The board reconvened yesterday after suspending an Oct. 31 meeting in which it failed to reach a decision on a proposal to dismiss an executive cited in a money-laundering and bribery investigation that has put Rousseff, who was Petrobras chairwoman from 2003 to 2010, on the defensive.
Sergio Machado, head of the producer’s transport unit Transpetro, said Nov. 3 that he will take 31 days unpaid leave. That followed a refusal by auditor PricewaterhouseCoopers to sign off on the company’s quarterly results bearing his signature, said two people with knowledge of the issue. Machado said he’s done nothing wrong and called the allegations absurd.
Price Parity
Investors are still waiting to see how much Petrobras will increase prices and if it will be for both diesel and gasoline, Brendler said.
“We have parity, so it’s not like there’s urgency here,” Eric Conrads, a money manager at ING Groep NV in New York who helps oversee about $500 million of Latin American stocks, said by telephone, referring to the gap between imported fuel and local price caps in Brazil.
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