The Strategist

Brazilian President appoints former defence minister to head Petrobras

02/22/2021 - 04:00

Brazilian President Jair Bolsonaro said on his Facebook page that he was appointing former defence minister General Joaquim Silva e Luna as the new head of the state oil company Petroleo Brasileiro (Petrobras).

This will be the first military chief at Petrobras since the 1980s, when the country ended a military dictatorship.

Current Petrobras chief Roberto Castello Branco took over on 1 January 2019, the day Jair Bolsonaro himself took office as Brazilian president. 

In those two years he has managed not just to steer the company through a difficult pandemic, but also to reduce its debts. However, Mr. Branco has spoken out against state interference in the affairs of the public oil company, open competition in the market and has drawn up a long-term development plan for the company that includes selling a number of loss-making assets. 

At the same time, Petrobras has raised fuel prices in the country to bring them up to market levels and be competitive in the market. All these actions by Mr. Branco were welcomed by investors but led to mass demonstrations by agricultural workers, who threatened a nationwide strike.

On Friday, Mr. Bolsonaro told at a news conference that the government would "never interfere in the affairs of this great company or its pricing policy", but said Petrobras could only raise prices as long as the process was "predictable" and "transparent". Immediately after the announcement of the change of chief executive, Petrobras shares plunged 6.6%.

Petrobras said it had received notification from the country's Energy Ministry of the President's request for an extraordinary board meeting to vote on Mr. Luna's appointment. Mr Branco's term ends in exactly one month, on 20 March.