Trucker protests lead to supply crisis and could force out Petrobras CEO

. May 24, 2018
petrobras CEO truckers protest brazil Truckers protest could push out Petrobras CEO. Photo: ABr
petrobras CEO truckers protest brazil

Trucker protest could push out Petrobras CEO. Photo: ABr

When Pedro Parente took over as Petrobras CEO, he assured investors that the government would not interfere with the company’s pricing policy. That decision would be strictly based on business, Parente said at the time. Almost two years later, however, the executive is being forced to accept political intervention.

The Brazilian state-owned oil and gas company announced that it will slash diesel prices by 10 percent – and will freeze fares for 15 days. The decision follows a nationwide protest by truck drivers against mounting fuel prices. As roadblocks have been set up across 23 states, the government couldn’t help but bow to the truckers’ demands.

While Parente stated that the decision is by no means a change in the company’s pricing policy, the power balance is not tipping in favor of the government. President Michel Temer asked for a three-day “truce” to give the administration some time to come up with a solution to the quagmire, but truckers refused and plan to stay put at least through Friday.

</p> <p>Few sectors have as much bargaining power as transportation companies. As <strong>The Brazilian Report</strong> showed in November 2017, <a href="">roads are the prevalent means of transportation</a> in the country, accounting for 61 percent of cargo transportation – despite Brazil’s immense potential for water transit. If roads are blocked, goods can’t move within the country.</p> <hr /> <p><img loading="lazy" class="alignnone size-full wp-image-4464" src="" alt="main roadblocks brazil truckers protest petrobras ceo" width="927" height="780" srcset=" 927w, 300w, 768w, 610w" sizes="(max-width: 927px) 100vw, 927px" /></p> <hr /> <p>In the span of merely three days, truckers managed to create a supply crisis across many states. São Paulo faced a fuel shortage in many gas stations and cut the number of buses on the streets by 40 percent. In Rio, unless bus companies get fuel within the next 24 hours, the whole municipal public transportation network could be shut down. In Brasília, airport activity has been reduced.</p> <p>In several states, goods like vegetables and fruits – which are supplied daily due to their perishable nature – might not be found on the shelves of supermarkets.</p> <p>The same thing occurred in 1999 under Fernando Henrique Cardoso’s administration. At the time, the government had to freeze toll fares and fuels to persuade the protesters – and nearly asked the Armed Forces for help. The current administration, however, lacks the political capital to pull such a stunt.</p> <p>Dilma Rousseff also had to contend with disgruntled truckers. In her case, though, there was a twist: the protesters were in favor of her impeachment, and helped fuel the full-scale crisis that led to her eviction from the presidency.</p> <hr /> <p><img loading="lazy" class="alignnone size-large wp-image-4466" src="" alt="petrobras ceo fuel prices brazil" width="1024" height="330" srcset=" 1024w, 300w, 768w, 610w, 1180w" sizes="(max-width: 1024px) 100vw, 1024px" /></p> <hr /> <h3>Petrobras CEO out?</h3> <p>The current crisis could have an effect on Pedro Parente’s future as Petrobras CEO. He takes pride in eliminating the pernicious levels of political interference within Petrobras, and has helped dig Brazil’s largest company out of its financial hole. Having to slash prices to ease a political crisis might be a tough pill to swallow.</p> <p>Last month, food processing company BRF elected Parente as its chairman of the board. It was implied that the executive would join the company next year, after the end of Michel Temer’s administration.</p> <p>But that timeline could change – especially due to BRF’s internal problems. After three days of protests, the company was forced to shut down 13 plants because of a lack of basic materials. The fact that the company’s administration has become so vulnerable so quickly reveals just how badly it’s in need of an overhaul. This week’s crisis could be Parente’s cue to leave.</p> <h3>Why Brazil’s should diversify its transportation network</h3> <p>In the 1950s, Brazil made a choice to connect the country through roads to detriment of water transit and railroads. That choice was unwise for a number of reasons.</p> <p>Roads are both the most expensive and the least efficient transportation method – especially for a country like Brazil, with a territory 14 times larger than that of France.</p> <hr /> <p><img loading="lazy" class="alignnone size-large wp-image-4463" src="" alt="cargo transportation brazil" width="1024" height="260" srcset=" 1024w, 300w, 768w, 610w, 1180w" sizes="(max-width: 1024px) 100vw, 1024px" /></p> <hr /> <p>Only 12.4 percent of Brazilian roads are paved. The World Economic Forum ranked 140 countries based on the quality of their roads, placing Brazil in 121th behind neighbors like Chile, Uruguay, Argentina, Bolivia and Peru. The grades given by the Forum ranged from 1 to 7, with Brazil receiving 2.7. The quality of trucks is also dreadful. While vehicles in the U.S. are normally not over six years old, in Brazil they can be driven for up to 20 years.</p> <p>According to CNT, the National Confederation of Transports, Brazilian roads cause losses of roughly USD 900 million per year in logistical costs.</p> <p>Data from CNT shows that in 2016, Brazil invested BRL 8.6 billion into road infrastructure. “We decided to be a country connected by roads, but we can’t even be that,” explains Marcus Quintella Cury, a professor at Fundação Getulio Vargas and a specialist in public transportation. “There are too few roads, and the ones we do have are predominantly in a terrible state.”

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Gustavo Ribeiro

An award-winning journalist, Gustavo has extensive experience covering Brazilian politics and international affairs. He has been featured across Brazilian and French media outlets and founded The Brazilian Report in 2017. He holds a master’s degree in Political Science and Latin American studies from Panthéon-Sorbonne University in Paris.

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