Petrobras (PBR) · · 3 min read

Friendly Fire in LatAm

The government confirmed that Mr. Silva e Luna would no longer be Petrobras’s CEO or a board member, and the government nominated Adriano Pires to replace him. The board election will happen on April 13, and the board should consider Mr. Pires to take place as CEO after that.

As anticipated, Mr. Bolsonaro fired Mr. Joaquim Silva e Luna and appointed Adriano Pires as Petrobras’ new CEO.

The government confirmed that Mr. Silva e Luna would no longer be Petrobras’s CEO or a board member, and the government nominated Adriano Pires to replace him. The board election will happen on April 13, and the board should consider Mr. Pires to take place as CEO after that.

Mr. Pires holds a bachelor’s degree in economics, a Ph.D. in industrial economics from the University of Paris XIII, and a Master’s degree in energy planning. He is the founding director of the Brazilian Center for Infrastructure (CBIE), which coordinates projects and studies for the natural gas industry, the national fuel policy, and the oil and natural gas derivatives market.

Adriano Pires was an adjunct professor for the energy planning program at COPPE/UFRJ, working as a researcher and consultant with international companies and entities, including UNESCO, EEC, IBRD, the National Electric Energy Agency, and National National Geographic Council for Scientific and Technological Development, and Unicamp.

He also served as an advisor to the director-general of the National Agency of Petroleum, Natural Gas and Biofuels (ANP) and has held positions such as superintendent of supply, petroleum import and export, and its derivatives natural gas.

(Local Newspaper) 👏👏👏👏

Giro's Newsletter is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

When it comes to Petrobras, any changes to its top management raise concerns about what this could mean in terms of the company’s pricing/investment policy.

Mr. Silva e Luna was doing a great job preserving the company’s role in society and protecting the rights of minority shareholders. Mr. Bolsonaro’s decision to fire him is populist and friendly fire on someone himself appointed to the role.

Mr. Pires’s resume is fantastic. His references are excellent as well. However, I don’t believe Mr.Pires would screw his reputation on the market for controlling fuel pricing policy, which leads me to believe that Mr.Bolsonaro fired Mr.Luna e Silva just to show who is in charge.

Source: Google. Mr. Bolsonaro.

Sell-side is writing many BS notes about how compliance will protect the company against populist decisions… C’mon dude… More intellectual honesty, please. 😒

I’m not holding PBR. Unfortunately, the stock isn’t driven by oil prices, rather by political communication.😔

Giro's Newsletter is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

Friendly fire - Part II

What a week in LatAm, friends.

In Chile, the Boric administration took office just days ago, and so far, it has not been able to enjoy the so-called “honeymoon” period. 😢😢😢

Quem é Gabriel Boric, o novo presidente do Chile – DW – 19/12/2021
Source: Google. Mr. Boric.

According to the local press, last Friday, FinMin Marcel outlined a package that includes raising the minimum wage to CLP400,000 in 2022 (+14%), subsidies for SMEs, increasing subsidies for Transantiago, and regional transportation, bonuses for cultural workers, and the creation of a debt consolidation platform.

The total cost of the plan would be about US$3.5bn, and the project seeks to generate some 350,000 jobs in the short term. The market reaction is illustrated in the following image.

Source: TradingView. Chile 10YR Bond Yield.

😵Long-term rates in Chile raised from 3% to 6,5%😵 This is the weight of a populist left-wing president in LatAm.

Also, Tax and pension reform bills are expected for June and 2H22, respectively. While the project that raises the minimum wage is to be presented before Congress in April, the tax reform bill is expected for June, and the pension reform in the last semester.

The aim is to increase the effective tax burden by 4%-pt of GDP, quite a complex task. Minister of Finance Marcel indicated the focus would be on personal taxes (income and assets). 😶‍🌫️😶‍🌫️😶‍🌫️

Giro's Newsletter is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

Regarding pension reform, a “social dialogue” process is to be opened, but for a limited period. The financing for higher pension spending comes from general taxes and contributions from the worker and the employer.

Yeah… Central bank’s life got a bit tougher. 🤦‍♂️🤦‍♂️🤦‍♂️

Read next

Two Years, Four CEOs
Petrobras (PBR) ·

Two Years, Four CEOs

What is going on with PBR? In 2021, Mr. Roberto Castelo Branco, forme PBR’s CEO, was invited by the Mines and Energy Minister and Economy Miniter to give his opinion about fuel prices.