Brasilia. In Brazil there are massive price drops on the stock exchange cameafter President Jair Bolsonaro replaced the head of the state-run petroleum company Petrobras, Roberto Castello Branco, with another military man, General Joaquim Silva e Luna.
Financial investors saw a relevant increase in political interference in state-owned companies and sold large quantities of these companies’ securities. The shares of Petrobras plummeted by more than 20 percent. The oil company lost thereby eleven billion euros. This was the largest price loss on the São Paulo stock exchange since the crash in March 2020. The values of the state-owned Banco do Brasil also fell by 11.65 percent. The leading share index, Ibovespa, closed with a minus of six percent, the largest daily loss in a year.
The government immediately tried to regain the confidence of the financial markets and promised large-scale privatization. Bolsonaro was enough on Tuesday a bill to sell the state’s shares in the electricity company Eletrobras. The state holds around 43 percent of the company with annual sales of 5.1 billion euros. He also issued a decree to cut back the public operation of motorways, ports and airports and to outsource them to private providers. “Our agenda of privatization continues at full steam. We want to downsize the state so that the economy can do what society needs,” said the head of state.
The share value of Petrobras recovered by twelve percent the following day, after the president repeatedly called on the new Petrobras director in the energy sector praised would have. Most recently, General Joaquim Silva e Luna ran the bi-national hydropower plant Itaipu Binacional and, according to Bolsonaro, “cleaned it up properly”.
On Thursday announced Petrobras posted a record profit of almost nine billion euros for the fourth quarter of 2020. According to trade analyst Economatica, this represents the highest profit in history for a Brazilian stock exchange company.
Bolsonaro had fired the chief of Petrobras after the Petrol and diesel prices had risen again. The diesel price had risen by 15 percent, making it 28 percent more expensive since the beginning of the year. For gasoline, it has been 35 percent since the beginning of the year. The transport companies and truck drivers protested against this and threatened a strike. In Brazil, goods traffic is almost exclusively carried out by road. With the new appointment, Bolsonaro wanted to stop the rising price trend, but this encountered resistance from the financial markets.
From the point of view of the unions, the critical situation of high gasoline prices calls for completely different answers. “The Bolsonaro administration points to the tax burden as the main cause of the rise in fuel prices. The price fluctuations are much more due to Petrobras’ pricing policy, which is linked to the dollar, and the price of oil on the international market,” said the deputy head of the trade union research institute DIEESE, José Silvestre. In this respect, the change at the top of Petrobras is meaningless in itself.
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