Petrobras CEO resigns amid government pressure

Petrobras, Brazil’s state-controlled oil and gas giant, announced by way of a securities filing that José Mauro Coelho has resigned as the company’s chief executive officer. 

Almost a month ago, the government had declared it was going to replace the head of Brazil’s largest firm. The announcement came a mere 40 days into Mr. Coelho’s tenure. But he initially refused to resign on his own, triggering a lengthy process for the government to overhaul the company’s leadership.

After Petrobras announced further hikes of gasoline and diesel prices on Friday, the heat seemingly became untenable. House Speaker Arthur Lira called Mr. Coelho “illegitimate” and urged him to leave his position. Mr. Lira also vented the idea of creating a hearings committee to scrutinize the company’s finances and a way to bully Petrobras into freezing its prices.

Petrobras will now have its fourth CEO since Jair Bolsonaro took office. The company’s board selected Exploration and Production Officer Fernando Borges as the new interim CEO, who will remain in charge until a definitive chief executive is chosen. The government have pushed for Caio Paes de Andrade, the current debureaucratization secretary in the Economy Ministry, to be named as Mr. Coelho’s replacement.

With fuel prices spiraling out of control and taking a heavy burden on households’ budgets, the government has tried to scapegoat the company and set up a revolving door at the Petrobras CEO’s office.

Share prices of the oil giant crashed 6.09 percent on Friday and were expected to dip further as Congress tries to interfere with its pricing policy. Last week, Congress passed a bill capping state-level fuel taxes at 17 percent, raising doubts over the government’s fiscal situation and adding to a stock market rout already in place due to a global sell-off spurred by worries over high inflation, rising interest rates and supply chain disruptions.

With the news of Mr. Coelho’s resignation, trading of Petrobras shares — the biggest corporation in Brazil — was suspended by B3, the manager of the São Paulo stock exchange. Shares only resumed trading at 10:50 am, with strong volatility. After opening with drops of 5 percent, common stocks were down 2.21 percent and preferred stocks were down 4.08 percent at 10:56 am.

B3 also reported that business was suspended once again, from 11:04 am to 11:24 am, due to the “imminence of disclosing of a material fact.”

The Ibovespa stock index opened on Monday up by a half percentage point but quickly dipped and by 10:25 am local time was down by 0.44 percent. The Brazilian Real also began to take a nosedive against the U.S. Dollar.

This is a developing story.

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