Brazil’s Ministry of Mines and Energy announced on Monday that it would remove José Mauro Ferreira Coelho as president of Petrobras, the state oil company, after 40 days of holding the position.
Coelho was the third person appointed to the Petrobras presidency in the past year. Petrobras’ executives have been openly feuding with conservative President Jair Bolsonaro over the country’s soaring gasoline prices, a result of inflation and growing shortages. Bolsonaro has regularly complained in public that Petrobras’ gasoline prices are too onerous on the Brazilian public and unjustifiable given the corporation’s excessive profit margins.
Bolsonaro has refused, however, to use government power to implement price controls and simply reduce the prices himself, claiming that doing so would destroy the finances of Petrobras and citing the prior administrations of socialists Dilma Rousseff and Luiz Inácio Lula da Silva, who did lower gasoline prices through the government, as proof of government intervention causing needless economic problems. Lula, who founded and still leads the country’s socialist Workers’ Party (PT), is currently the frontrunner over Bolsonaro in the 2022 presidential election.
Under Lula, politicians nationwide participated in a massive corruption scheme now known as “Operation Car Wash,” in which the government overpaid private companies for infrastructure projects and then individual politicians received a cut of the excess profits in the form of bribes. Petrobras, technically a private company whose controlling shareholder is the Brazilian government, was a critical piece of the scheme.
Lula was sentenced to upwards of 25 years in prison in 2019 for illicitly profiting from “Operation Car Wash,” but the Supreme Federal Tribunal (STF), Brazil’s top court, overturned the sentence, allowing him to run for president again. Rousseff was not implicated in Operation Car Wash even though she was the minister of mines and energy under Lula – directly in charge of relations with Petrobras.
Former Brazilian president, Luiz Inacio Lula da Silva (2003-2011), raises his fist during a rally in metropolitan Sao Paulo, Brazil, on November 9, 2019. Lula, a socialist, is the frontrunner over Bolsonaro in the upcoming 2022 presidential election. (NELSON ALMEIDA/AFP via Getty Images)
The Ministry announced on Monday that it had decided to use its power as controlling shareholder of Petrobras to remove Coelho, the now-former president, not specifying why he lost his job.
“The government sents its thanks to President José Mauro for the results achieved during his time running Petrobras. Brazil is currently living through challenging times due to the effects of the extreme volatility of hydrocarbons in international markets,” the statement read in part. “In addition, various geopolitical factors known by all are impacting not just the prices of gasoline and diesel, but over all energy components.”
The “geopolitical factors” referenced appear to be an international spike in gasoline and other fuel prices related to Russia’s invasion of Ukraine, which prompted boycotts of Russian oil and natural gas that significantly cut supplies, raising prices. Fuel prices had also dropped significantly in the immediate aftermath of the Chinese coronavirus pandemic, which resulted in lockdowns keeping millions at home and had begun to rise as workers returned to normal commutes around the world.
“Working and contributing towards a balanced scenario in the energy sector is fundamental for the generation of value of the company, benefitting all of society,” the statement continued, announcing that the government would nominate Caio Mário Paes de Andrade to replace Coelho. The Ministry added that Paes de Andrade would bring a Harvard and Duke pedigree to the post. Paes de Andrade is currently working at Brazil’s Economy Ministry on “de-bureaucratization.”
The company will have to approve Paes de Andrade as its new president.
Coelho lasted as president of Petrobras a mere 40 days. The Bolsonaro administration replaced his predecessor, Joaquim Silva e Luna, in April, after Bolsonaro himself repeatedly condemned the company for what he said he considered outrageous profit margins, particularly given the economic difficulties that middle-class and poor Brazilians were being forced to endure. Petrobras raised gasoline prices in March, blaming the Ukraine-Russia war, shortly before the government expelled Silva e Luna from the presidency.
A gas station near the statue of Christ the Redeemer on March 12, 2022, in Rio de Janeiro, Brazil. (Buda Mendes/Getty Images)
Shortly thereafter, Bolsonaro used a Facebook live broadcast to accuse Petrobras of “raping” Brazilian citizens’ wallets.
“People are pleading with Petrobras, don’t readjust the price of gasoline. You are raking in absurd profits,” Bolsonaro said in early May. “She [Petrobras] should have a social function. Petrobras, we are at war. Petrobras, don’t increase the price of gasoline. Your profits are a rape, are an absurdity.”
“Many oil companies around the world have reduced their prices, lowered the profit margins of their companies. What for? To help their country not break,” Bolsonaro continued. “Brazil, if it has one more price increase, it can break. And Petrobras staff don’t understand, or don’t want to understand, or are just looking to make a profit.”
Bolsonaro insisted that he would not use government price controls to override Petrobras, condemning Lula and Rousseff for having done so during their presidencies.
“It caused Petrobras to have a 900 billion [reais, $178 billion] over the interference in the price of gasoline, among other actions aimed at corruption. Intervention is out of the question,” Bolsonaro argued. “On the other hand … Petrobras’ profit got bigger with the crisis. That is a crime, unacceptable.”
Petrobras posted 44.56 billion reais ($8.86 billion) in first-quarter profits on the same day of Bolsonaro’s live comments, slightly higher than Bolsonaro had predicted.
Bolsonaro published a video on social media this week again continuing to express concern about fuel prices in the country – this time appearing to implicate Petrobras in corruption with the far-left governments of Bolivia and Argentina.
“Bolivia cut 30 percent of our gas to send to Argentina. How did Petrobras act on this issue too? It looks like it was all orchestrated,” Bolsonaro said. “Gas that has to be bought from somewhere else is five times more expensive. Who is going to pay the bill? And who is going to be responsible?”
“Us,” responded the assembled crowd.
“It’s a business that looks, it looks orchestrated. Exactly to benefit you know who,” Bolsonaro said, without elaborating – presumably meaning Lula, his election rival.
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