Brazilian senator to lead public oil giant Petrobras

The Associated Press Published Friday, January 3rd, 2003

RIO DE JANEIRO, Brazil (AP) - A senator with a degree in geology on Friday will take the helm of Brazil's state-controlled oil giant, Petrobras.

The appointment of Workers Party Sen. Eduardo Dutra as Petrobras' new president was announced Thursday night by Andre Singer, spokesman for new President Luiz Inacio Lula da Silva.

Market analysts have said that the 45-year-old Dutra, who will replace Francisco Gros, lacks the business experience needed to head one of Brazil's most profitable and heavily traded companies. They said investors would view Dutra as a political appointee, which could undermine credibility in the company.

Analysts have also said that Dutra's appointment could mean greater government intervention on Petrobras' fuel pricing policy.

But Wagner Victer, energy secretary for the state of Rio de Janeiro, said Dutra was "a suitable choice. He has the requisites needed to be a good president."

Brazil's new mines and energy minister, Dilma Roussef, told a news conference before Dutra was sworn in that the government was trying to find mechanisms to limit the volatility of gasoline prices.

Future price controls would not mean subsidizing gasoline prices, though, Roussef said.

Before a liberalization of the petroleum sector in January 2002, the government fixed gasoline prices every couple of months through a complicated pricing system that ran large deficits. The government used the controls to put off necessary fuel price increases and curb inflation.