April 12, 2019 / 12:23 PM / 2 months ago

UPDATE 2-Petrobras postpones diesel price hike under pressure from Bolsonaro -source

(Recasts with details on pressure from president)

By Lisandra Paraguassu and Rodrigo Viga Gaier

BRASILIA/RIO DE JANEIRO, April 12 (Reuters) - Brazil’s state-controlled oil company Petroleo Brasileiro SA said on Friday it will postpone a diesel price hike, following pressure from Brazilian President Jair Bolsonaro, according to a person familiar with the matter.

Petrobras, as the company is known, announced on Thursday afternoon it would raise diesel prices by 5.7 percent to the highest level since October, effective on Friday, then disclosed it was backing off in an early-morning securities filing.

The abrupt reversal raised the specter of renewed political interference at the state oil firm, which sold fuel at a loss for years as a result of political pressure, and lost its chief executive officer last year in a spat with the government over diesel prices.

Bolsonaro called Petrobras CEO Roberto Castello Branco late Thursday to address the sharp price hike after discussing the matter with presidential chief of staff Onyx Lorenzoni, according to the source in the presidential palace. Bolsonaro installed Branco after his January inauguration,

“The president asked to reduce the increase from 5 percent to 1 percent,” said the source, who requested anonymity due to the sensitivity of the subject.

Petrobras said in the Friday filing its current hedge position allowed it to delay a price revision for “some days,” without detailing its plans for a future readjustment.

Last year, a huge Brazilian truckers strike over high diesel prices paralyzed much of the country and led the government to intervene in Petrobras’ pricing policy. CEO Pedro Parente quit in protest and the company’s share price was nearly halved in a month.

Last month, Petrobras updated its diesel pricing policy, saying they would not be readjusted more than once every 15 days and reaffirming it would not price the fuel below parity with international markets. (Reporting by Lisandra Paraguassu in Brasilia and Rodrigo Viga Gaier in Rio de Janeiro; Additional reporting by Carolina Mandl in Sao Paulo; Editing by Brad Haynes and Jeffrey Benkoe)

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