Bolsonaro slams Petrobras gas price hike

Brazil's president Jair Bolsonaro slammed state-controlled Petrobras' wholesale natural gas price increase this week, just as Brazil's gas market is poised to take off.

Speaking in Parana state, Bolsonaro called this week's 39pc average gas price hike "unacceptable" and threatened to change Petrobras' pricing policies, the latest threat to the company's commercial autonomy.

The remarks echoed his February offensive against Petrobras' fuel pricing that led to the abrupt toppling of the company's management.

Bolsonaro was flanked by former army general Joaquim Silva e Luna, who will become the new chief executive of Petrobras this month, replacing technocrat Roberto Castello Branco. Today's event was a ceremony to swear in his successor at the helm of the Itaipu hydroelectric dam.

Bolsonaro said Silva e Luna "understands" that a company needs to have transparent, predictable prices. "What kind of contracts (allow a 39pc price hike)?" he said, adding that he is not going to intervene in pricing, but then adding that it is possible to "change the pricing policy."

Several options, including the introduction of a fuel price stabilization mechanism, are under discussion, Brazilian oil officials have said.

Bolsonaro promised to present a bill to the congress in coming weeks aimed at bringing "transparency" to fuel prices.

In a statement earlier this week, Petrobras said that the gas price increase reflected higher global oil prices and the weaker Brazilian real. The company also said that gas transport fees were readjusted because of higher wholesale inflation, which grew by 31pc in the 12-month period ending in March. The gas price increase goes into effect on 1 May.

Brazil's gas distributors association Abegas said that it has defended increased competition in gas supply and more investments in gas transport infrastructure to combat higher prices. The group said that the mines and energy ministry has invited industry representatives to Brasilia on 9 April for a meeting to discuss the price hike.

The political noise over gas prices comes as Petrobras reduces its dominant position in the gas market and divests midstream assets.

Last month, Brazil's congress passed landmark gas legislation that guarantees third-party access to gas transport infrastructure, laying the groundwork for a competitive market. Bolsonaro is supposed to sign the bill into law as early as tomorrow.

No lockdown

In other remarks today, Bolsonaro reiterated that he would not declare a national lockdown, one day after the number of Covid-19 related deaths reached a record 4,195 in a single 24-hour period.

Bolsonaro hinted that the military might be needed to "contain" unrest sparked by the pandemic, rekindling fears that he is using the armed forces for his own political ends.

The statement follows the 30 March shakeup of Brazil's top military brass, and an earlier cabinet overhaul.

Brazil's private sector, once firmly in Bolsonaro's camp, is growing alarmed over the pandemic and the course of the economy. Hundreds of business leaders recently signed a letter to the president demanding better management. Several have openly expressed regret for supporting him in 2018.