Petrobras’ new president has 5 goals and a challenge; understand

The ideas of former Senator Jean Paul Prates (PT), the new president of Petrobras, are no secret. Neither for the press, nor for the market, nor for the high-ranking members of Petrobras itself, with whom the former senator has been talking since December.

His first goal will be to change the five advisers appointed during the management of Jair Bolsonaro (PL) and guarantee a majority in the collegiate, which once again had 11 members with his arrival.

The Union, which had eight of the 11 seats, saw its decision-making power diminish in the company’s last General Meeting, when it lost two posts to minority shareholders. With a strategy, these vacancies could even be retaken in the future by the government of Luiz Inácio Lula da Silva (PT), but the councilors themselves recognize that the task is difficult.

In addition to reforming the council, Prates also wants to change directors. Today, Petrobras’ board has eight executives. Company interlocutors expect the departure of at least half under the management of the PT.

It is only with the change of directors and advisors that Prates will be able to change the company’s structural issues, even though he has already promised management without ‘trauma’ or ‘scare’.

The second step should be the suspension of the refinery sale process, which has been ongoing since the government of Michel Temer (MDB). Prates defends redoing the studies on which the decisions were based and only then taking an effective measure, whether to proceed with the plan, which is less likely, or even to buy back refineries. Before that, however, he intends to evaluate updates in Petrobras’ refining parks.

There are already three refineries with the privatization process completed: Rlam, Reman and Six. Another five refineries are in the privatization process: Lubnor, Rnest, Repar, Refap and Regap. Another five would be kept in Petrobras’ portfolio by the strategic plan: Reduc, Replan, Revap, Rbpc and Recap.

The third step is the articulation to create a kind of stabilization fund that, according to him, could have resources from the royalties from exploration of the oil fields and also from the dividends paid by Petrobras, including to the Union.

“[A ideia] it is to pay partially, sporadically, temporarily, to shield the Brazilian citizen from international oscillation, it is not exactly the subsidy of helping a producer to become viable”, he told the CNN in December.

This goal is linked to the fourth step, a campaign promise by Lula: “Brazilize fuel prices”. This means, in practice, changing the triggers for increasing diesel and gasoline values ​​linked to the stabilization fund.

Prates defends that the price parity should be international and not for export, as it is today. This would mean aligning prices with what is charged in other countries and not by importers.

There is still a fifth goal of Prates, also very much in line with the ideals of the Lula government: greater investment in the energy transition, seeking more renewable energy sources. Prates defends wind energy, biofuels and hydrogen as a source of energy and wants to bet on that within Petrobras.

To invest more, however, Prates can articulate a reduction in the volume of dividends paid to shareholders of the state-owned company, which may represent his greatest challenge, precisely because he does not have the support of representatives of minority shareholders.

Dividends are the portion of profit paid to shareholders of the state-owned company. The Shareholder Remuneration Policy, approved by the Board of Directors in 2019 and modified in subsequent years, provides for periodic payments.

The state-owned company argues that the payments per share reflect the decrease in the company’s debt. The problem is that this transfer is highly criticized by influential sectors of the PT.

In November, party president Gleisi Hoffmann had posted a critique on her Twitter account. “Once the election is over, the bloodletting at Petrobras returns. They are preparing the distribution of R$ 50 billion in dividends. We do not agree with this policy, which deprives the company of its investment capacity and only enriches shareholders. Petrobras has to serve the Brazilian people,” she said.

High-ranking sources at Petrobras pointed to the CNN that a change in the shareholder remuneration policy that reduces payments to those who hold oil company shares could devalue Petrobras’ shares in the market.