RIO DE JANEIRO, (Reuters) – Brazilian President Jair Bolsonaro moved to replace the head of state-run oil company Petrobras, naming a retired army general to the CEO post after weeks of tension with the current chief executive over fuel price hikes.
In a late Friday statement from the Mines and Energy Ministry, first shared on Bolsonaro’s Facebook page, the government said it had decided to appoint former Defense Minister Joaquim Silva e Luna to run Petroleo Brasileiro SA , as the firm is known formally.
Current CEO Roberto Castello Branco, a favourite of investors for his efforts to sell underperforming assets and cut debt, has drawn ire in recent weeks from Bolsonaro for raising fuel prices. Petrobras ADRs traded in New York slumped 8.9% in after-hours trading, adding to a drop of nearly 7% in its Brazil-listed preferred shares on Friday.
Castello Branco would be the second Petrobras CEO to fall in three years over the political fallout from fuel pricing. In 2018 then-CEO Pedro Parente resigned when the government forced fuel prices lower in a concession to striking truckers.
Parente vowed to set domestic prices in line with global markets, breaking with a policy under prior governments making Petrobras sell fuel below international parity, triggering some $40 billion in losses from 2011 to 2014.
Bolsonaro’s decision to force out Castello Branco after facing protests from truck drivers over soaring diesel prices at the pump could force a broader shakeup at Petrobras, which has steered toward more market-friendly and less politically-driven policies in recent years.
The company’s senior management is considering resigning en masse to protest the CEO’s replacement, three people close to the executives told Reuters on Friday evening.
Petrobras said in a statement that it had received notice from the Mines and Energy Ministry about the proposed CEO change, adding that the ministry had requested an extraordinary shareholders’ meeting.
The company’s board of directors is set to meet on Tuesday in a regularly scheduled session.
