New Petrobras CEO Rejects Subsidies and Government Intervention

(Bloomberg) -- The new head of Brazil’s state-controlled oil company criticized its history of government interference and vowed to pursue policies that will boost profit, echoing a wider pledge by President Jair Bolsonaro to reduce the state’s role in Latin America’s largest economy.

Roberto Castello Branco, who was sworn in as chief executive officer of Petrobras on Thursday, said he was “revolted” by the moral and financial crises the company has been through in recent years, and vowed to increase oil production and reduce the largest debt load of any publicly traded oil company. The deep-water oil producer will also continue a divestment program that has helped raise cash and streamline its operations, he said.

New Petrobras CEO Rejects Subsidies and Government Intervention

“Fuel prices should be in line with international ones, with a sound ‘no’ to subsidies or to attempts at having a monopoly,” Castello Branco said in his inauguration speech. “We are pro-market economists. We like competition,” he later said to reporters.

Energy Minister Bento Albuquerque, who attended the ceremony in Rio de Janeiro, said the government will end diesel subsidies that were put in place last year to appease striking truckers. Castello Branco said Petrobras shouldn’t enjoy any monopolies and called for more competition in Brazil’s refining industry.

Investors have been encouraged by Castello Branco’s business-friendly statements since he was named for the position in mid-December. Petrobras closed up 2.45 percent at 24.65 reais, the highest since Dec. 7.

New Petrobras CEO Rejects Subsidies and Government Intervention

Bolsonaro has won praise from analysts and investors for tapping qualified candidates for his economic team. Economy Minister Paulo Guedes, Castello Branco and Joaquim Levy, the head of Brazil’s development bank BNDES, all studied at the University of Chicago and share liberal views on the economy.

Castello Branco was previously a board member at Petrobras in 2015 and 2016. He said the company has improved since a sprawling pay-to-play scandal became public in 2014 and prompted changes in corporate governance. He was also a director of investor relations at Vale SA, the world’s biggest iron ore miner.

The new CEO has defended Petrobras should focus on its core business and speed up oil production, while leaving aside other sectors. Fuel unit BR Distribuidora and midstream assets are among the ones that will be considered for possible sale, he said.

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