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Jair Bolsonaro dumps third Petrobras chief executive as fuel prices soar

The chief executive of Petrobras has been fired after only weeks in the job, making him the third boss of the Brazilian state-controlled oil company to be dismissed by Jair Bolsonaro’s government in 15 months.

Brazil’s mines and energy ministry announced on Monday evening it would remove José Mauro Coelho, a technocrat in post since mid-April, from the helm of the country’s most valuable business.

He is to be replaced by Caio Mário Paes de Andrade, an entrepreneur and member of economy minister Paulo Guedes’s team.

The decision followed a deluge of criticism from Bolsonaro of the state oil group over rises in fuel costs, which are damaging the far-right leader’s chances of re-election this year as inflation runs in the double digits.

Latin America’s largest hydrocarbon producer has a policy of setting diesel and petrol prices in line with international rates. But as crude benchmarks have jumped in the wake of the war in Ukraine, rises at gas pumps have provoked public anger.

The soaring fuel prices have turned the publicly listed Petrobras into a political target both for Bolsonaro and his main rival in the presidential race, the leftwing former president Luiz Inácio Lula da Silva.

The circumstances of Coelho’s departure are similar to those of his two predecessors, who had incurred Bolsonaro’s ire for not keeping fuel prices in check.

Coelho’s successor, de Andrade, most recently served as the administration’s secretary of debureaucratisation. “The new Petrobras CEO has a pro-market profile and should not alter the pricing policy,” said Andre Perfeito, chief economist at brokerage Necton Investimentos.

Yet the president’s latest intervention is likely to unnerve investors fearful of populist economic drift ahead of the race for the presidency in October. Petrobras has sought over the past few years to improve its corporate governance and cease being an instrument of government policy.

“This is absolutely unbelievable. It weakens the company, shoots it in the foot [and] is another step to weaken its governance. It’s a sign of an irresponsible government,” said Cláudio Frischtak, managing partner at Inter.B, a consultancy specialising in energy and infrastructure.

Under past leftwing governments, Petrobras was at the centre of a massive political corruption scandal and lost billions of dollars after keeping fuel prices artificially low.

The change of management will need to be formalised at a shareholder meeting and then approved by the board. Brasília owns about 37 per cent of the oil and gas group’s equity, and with just over half of voting rights effectively chooses the top position.

A new energy minister, who was appointed by Bolsonaro this month after the president lashed out at his predecessor over fuel prices, has ordered a study into the possible privatisation of Petrobras.

Additional reporting by Carolina Ingizza

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