Petrobras? That's PTbras for You
www.brazzil.com John Fitzgerald
Lula's party, the PT, cannot re-nationalize those areas and companies privatized during the Fernando Henrique Cardoso administrations, but it is determined to retain state control even if this means undermining them. The prime targets are the regulatory watchdogs set up to prevent abuse and formation of monopolies.
When the idea of setting up Petrobras was put forward in 1951 (it was called then Petrobrás, with an accent) the slogan "O petróleo é nosso" (the petrol is ours) was used by its proponents to persuade the Brazilian people that the state should have a monopoly on the right to explore and exploit Brazil's oil reserves. When the company was partially privatized in 2000 and lost its monopoly, the then director of the national petroleum agency (ANP) announced "o petróleo é vosso" (the petrol is yours).
This was a bit of an overstatement since the government had no intention of giving up its majority stake in a company, which is not only the biggest in Latin America but of strategic importance to the country. There is virtually no prospect of Petrobras being privatized in the near future. "O petróleo é deles" (the petrol is theirs) would have been more appropriate.
As events this week showed, the PT is still against privatization and sees Petrobras as an asset to be held onto at all costs. A row started after the ANP (Agência Nacional de Petróleo—National Oil Agency) issued an announcement on Tuesday March 11 stating that huge deposits of high quality oil, amounting to 1.9 billion barrels, had been discovered off the coast of Sergipe state.
This immediately triggered a run on Petrobras shares, with the common share jumping by almost 6.5 percent before falling back to end the day almost 4.5 percent higher. Although the PT radicals need no encouragement to see conspiracy behind any stock market activity they were secretly delighted when it subsequently emerged that, on the day before the announcement, there had been an unusually high amount of trading of Petrobras shares. According to the Estado de S. Paulo newspaper, US$22 million in business was done that day compared with a daily average of R$13 million in the previous three weeks. The Brazilian equivalent of the US Securities and Exchange Commission, the CVM, announced an investigation.
To make things more complicated, Petrobras itself issued a statement claiming that the ANP's statement had been "incorrect, confusing and wrong". The company said the ANP had based its statement on insufficient data and had given what could prove to be an exaggerated estimate of the oil reserves.
The PT leader in the Lower House of Congress said any announcement on the Petrobras find should have been left to the company. However, experts quoted in the press said the ANP had behaved correctly and wondered why Petrobras had not issued the information on Friday March 7, the day it provided the ANP with the information.
What a gift all this has proved to be, not just to the PT radicals but to the whole government, including President Luiz Inácio Lula da Silva, which likes neither the way Petrobras has been run recently nor the ANP. The mines and energy minister, Dilma Roussef, cleared her diary and headed off to Brasília for a meeting with Lula and his right-hand man, Jose Dirceu. We do not know what these three old comrades discussed, but we can be sure that their plans included ways of stripping the ANP's authority and further strengthening the government's hold on Petrobras.
Although the PT knows it cannot re-nationalize those areas and companies privatized during the Fernando Henrique Cardoso administrations, it is determined to retain state control even if this means undermining them. The prime targets are the regulatory watchdogs, which were set up to ensure that the newly privatized companies did not abuse their power and that monopolies did not emerge.
Eight such agencies were set up to regulate areas such as oil, energy, telecommunications, electricity etc. These bodies have the power to set tariffs and, more importantly, their members have fixed mandates. This means that the directors cannot be routinely fired when a new administration takes over. The PT does not like these agencies because it believes they have assumed powers which should be in the hands of the politicians.
The government has other priorities at the moment than changing the laws covering the regulatory bodies, so minister Roussef will have to grit her teeth and wait until the mandates run out before acting. In the case of the ANP director his mandate lasts until 2005. However, Mrs. Roussef was an arms quartermaster for left-wing guerrillas in her younger days and hardly seems the type to wait that long.
Pressure will start being applied not only to the ANP but the other regulators. ANATEL, the telecommunications watchdog has already been given notice by the communications minister, Miro Teixeira, that he and not it will assume responsibility for renewing concession contracts for fixed-line telephone services when the present contracts expire in 2006. The other agencies, such as ANEEL, which regulates the electrical energy sector, are also in the firing line.
As for Petrobras, one of the first moves by Lula's government was to change its board of directors and appoint a former PT senator as its chairman. Dirceu himself was even appointed a board member but stood down after the move was poorly received on the market place. For old-style nationalist types of the Left or Right Petrobras is still a symbol of the country and not just another oil company. One recalls the fuss in December 2000 when the company announced that it would change its name to Petrobrax. The hostility to such a minor change was such that Cardoso himself had to intervene and the name was dropped instantly.
Maybe the name will be changed again—this time to PTbras.
John Fitzpatrick is a Scottish journalist who first visited Brazil in 1987 and has lived in São Paulo since 1995. He writes on politics and finance and runs his own company, Celtic Comunicações— www.celt.com.br, which specializes in editorial and translation services for Brazilian and foreign clients. You can reach him at jf@celt.com.br