Bolsonaro threatens to interfere in Petrobras

. Feb 19, 2021
petrobras bolsonaro interference Petrobras distribution center in Brasília. Photo: Marcello Casal Jr/ABr

This newsletter is for PREMIUM subscribers only. Become one now!

Today, Bolsonaro moves to interfere in Petrobras. The mega-investment by SoftBank in Brazilian education services. Brazil reaches 10 million cases as the country runs out of vaccines.

“Something’s going to happen in Petrobras”

In his regular Thursday live broadcast on social media, Jair Bolsonaro took multiple jabs at the leadership of Brazil’s state-controlled oil and gas firm Petrobras.

The president showed himself to be particularly bothered by a recent bump in fuel prices — the fourth increase this year — and recent remarks from Petrobras CEO Roberto Castello Branco, who said that a potential new truckers&#8217; strike is not the company&#8217;s problem. Truck drivers are protesting against high diesel prices, among other things.</p> <ul><li>After saying he &#8220;cannot nor would&#8221; <a href="">interfere</a> with Petrobras&#8217; pricing policy, Mr. Bolsonaro added that &#8220;something&#8217;s going to happen in Petrobras in the next few days.&#8221; He mentioned that Mr. Castello Branco&#8217;s words will be met with &#8220;consequences, obviously.&#8221;</li><li>The president also announced he would scrap federal taxes on diesel for two months and gas &#8220;for good,&#8221; in a move coordinated with Economy Minister Paulo Guedes. The president, however, failed to outline the effect his decision would have on the budget.</li></ul> <p><strong>What is behind.</strong> Jair Bolsonaro supported the 11-day truckers&#8217; strike in 2018, which <a href="">halted the economy</a> and caused billion-dollar losses. Since then, truck drivers have become an important constituency for the president. Workers are once again disgruntled and staged a <a href="">failed national strike on February 1</a>. The president fears that another increase in diesel prices — up 28 percent already this year — could unite truckers against the government.</p> <p><strong>Why it matters.</strong> Investors fear that Mr. Bolsonaro&#8217;s cryptic warning is a hint toward the potential firing of Roberto Castello Branco as Petrobras CEO. That would spark mistrust in the government&#8217;s <a href="">commitment to the company&#8217;s recovery</a> and scare off potential suitors for the assets the firm is planning to sell.</p> <ul><li>In an <a href="">interview</a> with finance newspaper Valor, one board member said the president&#8217;s remarks are &#8220;the last straw.&#8221; Marcelo Mesquita, who represents minority shareholders, said &#8220;it won&#8217;t be easy to find people with unblemished reputations willing to do the wrong thing [and accept government interference in fuel pricing].&#8221;</li></ul> <p><strong>Risks.</strong> Government tampering with the inner workings of Petrobras may expose the company to class-action lawsuits from international investors. Recent corruption scandals led to a 2019 <a href="">USD 3-billion settlement</a> with shareholders who accused leadership of deliberately not acting in their best interest.</p> <p><strong>Market.</strong> One should expect high volatility from Petrobras shares today.</p> <hr class="wp-block-separator"/> <h2>SoftBank makes another massive investment in Brazil</h2> <p>Earlier this year, Asian mega investment conglomerate SoftBank announced it intended to <a href="">pour</a> USD 1 billion into Latin America in 2021. The first move happened on Thursday, as SoftBank led a group of investors who put USD 83 million into Brazilian test-prep startup Descomplica.</p> <ul><li>Along with Softbank, other investors included Invus Group, the Chan Zuckerberg initiative, and U2 guitarist The Edge.</li></ul> <p><strong>Why it matters.</strong> This is the biggest investment in the history of Brazilian education startups. The sector has been hit hard by the pandemic, with dozens of millions of students left unattended as in-person classes were suspended. Many of these so-called &#8220;ed techs&#8221; propose to fill that gap.</p> <p><strong>What is Descomplica?</strong> Founded in 2011, Descomplica proposed to help students prepare for university entrance exams and competitive civil-service examinations, breaking down content with videos that are easy to consume.&nbsp;</p> <ul><li>Last year, the company launched undergraduate courses and saw a pandemic-led boost in total monthly users, now hitting around 5 million. Descomplica claims to hold 80 percent of the market for online <a href="">prepearation for Enem</a>, the national university entrance exam — used by most universities in Brazil.</li></ul> <p><strong>Where will the money go? </strong>Descomplica plans on making acquisitions, hiring more IT experts, and developing new products, including 33 new courses by 2022.&nbsp;</p> <ul><li>“We want to create the biggest university in Brazil, quickly reaching 1 million students with a 100-percent digital model,” says founder Marco Fisbhen.</li></ul> <hr class="wp-block-separator"/> <h2>Brazil hits 10 million cases</h2> <p>On Thursday, Brazil became just the third nation to reach the unwelcome milestone of 10 million confirmed coronavirus infections. The country also records almost 244,000 deaths, the world&#8217;s second-highest total.</p> <div class="flourish-embed flourish-chart" data-src="visualisation/5338888"><script src=""></script></div> <p><strong>Why it matters.</strong> Data shows that the coronavirus is spreading faster with the emergence of new variants — and this acceleration comes as the rollout of vaccines has <a href="">stuttered</a> in multiple parts of the country. At least nine state capitals are running out (or have already run out) of vaccine jabs.</p> <p><strong>Shortages. </strong>Health Minister Eduardo Pazuello had promised governors that 230 million new doses will be distributed by the end of July. But the government says it will have to re-evaluate its plan due to delays in production caused by a <a href="">lack of inputs from China</a>.</p> <ul><li>Congress is laying the groundwork to allow private companies to purchase vaccines ahead of the government, under two conditions: (1) companies must donate half of their purchases to the public health network; (2) vaccination order must obey the government&#8217;s priority list of at-risk populations.&nbsp;</li></ul> <p><strong>Anti-vax.</strong> President Jair Bolsonaro continued his <a href="">crusade against the Chinese-made CoronaVac</a> — which represents the bulk of vaccines distributed in Brazil. His 93-year-old mother was inoculated last week, and the president declared she received the AstraZeneca vaccine, but that health officials lied to make it look as if she had been administered the CoronaVac — which Mr. Bolsonaro said he would never take himself.</p> <iframe src="" width="100%" height="232" frameborder="0" allowtransparency="true" allow="encrypted-media"></iframe> <hr class="wp-block-separator"/> <h2>What else you need to know today</h2> <ul><li><strong>Congress. </strong>In a sitting scheduled for 5 pm, the lower house will decide whether to uphold the Supreme Court&#8217;s arrest of Congressman Daniel Silveira. The lawmaker published a video online verbally threatening members of the Supreme Court and advocating anti-democratic measures. While <a href="">legal scholars are split</a> on the legality of the arrest, Congress leans towards abandoning Mr. Silveira to avoid conflict with the Supreme Court (where dozens of lawmakers are set to face prosecution) and prevent delays to the government&#8217;s economic agenda.</li><li><strong>Telecommunications.</strong> The Supreme Court ruled in favor of allowing telephony and internet companies to install cables in public places without paying fees to municipalities. The court <a href="">states</a> that it is in public interest to facilitate the implementation of telecommunication services as a way of democratizing access to technology.</li><li><strong>Stimulus. </strong>The government reportedly wants to inject BRL 57 billion (USD 10.5 billion) into the economy by advancing bonuses for pensioners and retired workers. The move would have no impact on the <a href="">fiscal situation</a> — as it would consist purely of a change to the payment timetable — but it could buy Congress some time to agree on a new cash-transfer program. On Thursday, the Senate&#8217;s minority leader said lawmakers will <a href="">focus on the economic agenda next week</a>. </li><li><strong>Census.</strong> The Brazilian Institute of Geography and Statistics (IBGE) has opened 204,000 temporary work positions — the first step toward organizing the 2021 Census. The survey was scheduled to take place last year, but was <a href="">postponed</a> due to the pandemic. Census takers will visit all Brazilian municipalities between August and October. Held every 10 years, the Brazilian census is <a href="">crucial for policymaking</a>. The data obtained from the nationwide count is used for decisions on anything from school funding, vaccine policies, to electoral districting.

Read the full story NOW!

Our content is protected by copyright. Want to republish The Brazilian Report? Email us at