The Brazilian court has called on the Jair Bolsonaro government to explain its intention to replace the president of the state-owned oil company, a situation that has led to the fall of its shares on the stock exchange since Friday.
The decision was taken by magistrate André Prado, of the 7th Federal Court of Minas Gerais, in response to a lawsuit brought by two lawyers against the intention of the Brazilian Government, which proposed as the new president of Petrobras the general of the Army reserve Joaquim Silva and Luna.
According to the Brazilian judge, the Executive should explain, within 72 hours, the reason for this change in a “concise and objective” way.
The change Bolsonaro intends to impose on Petrobras, a state-owned oil company whose shares are listed on the São Paulo and New York stock exchanges, was interpreted by the markets as a kind of State “interference” in the company’s business.
As a consequence of this perception, Petrobras’ preferred shares on the São Paulo Stock Exchange fell 21.51% this Monday, while the common shares sank 20.48%, which led the São Paulo stock exchange to close with losses of 4, 87%.
According to the calculations of the financial market, since the Government announced the changes in Petrobras, which still need to be confirmed by the oil company’s board of directors, the company’s market value fell about 18 billion dollars (around 14.8 billion euros).
The presidency of Petrobras has been held since January 2019 by economist Roberto Castello Branco, a name proposed to Bolsonaro by the Minister of Economy, Paulo Guedes, a strong defender of the liberal line and of the non-intervention of the State in economic matters.
Bolsonaro started expressing his disagreement with Petrobras management two weeks ago, when a steady increase in fuel prices led truck drivers’ unions to threaten to carry out a general strike similar to the one carried out in May 2018, which paralyzed the country for eleven days with a serious economic impact.
Petrobras argued that the increase in fuel prices, which has already exceeded 30% this year, is due to the behavior of international markets and the devaluation of the real against the dollar.
Bolsonaro, leader of an emerging far-right that calls itself economically liberal, did not accept these explanations and ratified its decision to put General Silva e Luna at the head of Petrobras, who was Minister of Defense (2016-2018) and currently holds the position of director on the Brazilian side of the Itaipu hydroelectric plant.
This Monday, in a conversation with supporters, the Brazilian President insisted on criticisms of the oil company’s pricing policy and said that Castello Branco will not be re-elected.
“March 20 ends the term of the current president. It is my right to renew it or not. Will not be reappointed. What is the problem? ”Asked Bolsonaro.
“It is a sign that some in the financial market are very happy with the policy that only has a bias in Petrobras, serving the interests of some groups in Brazil, nothing more than that,” he added.
Last Friday, the head of state also said that other changes in the electric sector may occur and that the market also assumes that they will include Banco do Brasil.
Consequently, Eletrobras’ preferred and ordinary shares and Banco do Brasil’s ordinary shares, the other two large public companies in the South American country, also operate in decline.