RIO DE JANEIRO, April 2 (Reuters) - A Brazilian judge ordered state-run oil company Petroleo Brasileiro SA to explain the criteria it uses to set the price of gasoline, after price controls led to large refining-unit losses and ballooning debt.
The judge, Victor Giuzio Neto of the 24th Civil Part of the 3rd Federal Regional Tribunal in Sao Paulo, made the ruling on Tuesday at the request of Sao Paulo state legislator Fernando Capez of the Brazilian Social Democracy Party (PSDB), the court’s press office said.
Under the injunction, Petrobras, as the oil company is known, has five days to respond, Capez said in a statement.
“There is no transparency in the Petrobras accounts to set the price of gasoline, a question of great importance to the whole Brazilian society even as there is evidence of errors and missteps in the handling of this process,” he said.
Petrobras said Dec. 8 that its fuel-pricing policy aims to bring domestic fuel prices in line with world prices over the next two years. It declined to say what the policy was, though, citing corporate secrecy. Petrobras is the only refiner and importer of fuel in Brazil.
With Petrobras’ domestic refineries unable to meet rising demand, the company has been forced to import more fuel to sell in the domestic market at a loss. As a result Petrobras’ refining unit has lost 37 billion reais ($16 billion) in the last two years.
Meanwhile, with oil output stagnant for four years, a $221 billion five-year spending plan burning through cash and debt rising, the market value of Petrobras has plunged to $89 billion. In June 2008 it was worth nearly $300 billion, making it the world’s sixth largest company by market value. Petrobras is now the world’s most indebted and least profitable major oil company.
PSDB, the main opposition party at the federal level of government, has intensified its attacks on Petrobras and the government of President Dilma Rousseff and her Workers’ Party ahead of October presidential elections.
Many believe the government will not allow a price increase this year on concern it will push inflation higher during the election year. Inflation is already running at about 6 percent, close to the top of the government’s target range.
Petrobras said in a statement it has not been notified of the judge’s decision. The judge expects to publish his complete ruling on Thursday, the court press office said. Capez filed his injunction petition on March 27.
Petrobras shares rose 4.7 percent in Sao Paulo trading on Wednesday to 16.56 reais, its highest close in three months.
$1 = 2.27 Brazilian reais Reporting by Jeb Blount; Editing by David Gregorio