(Bloomberg) – The Brazilian government’s choice to lead Petroleo Brasileiro SA has stepped down from his role, risking a power vacuum at Latin America’s biggest oil producer that has become the center of a political dispute over fuel price.
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Adriano Pires declined the invitation on Monday, two people familiar with the matter said, asking not to be named because the information was not public. The government was still trying to convince Pires to take the job, they added.
The industry veteran has been appointed by the Brazilian government, the company’s majority shareholder, to replace Joaquim Silva e Luna, who had fallen out with President Jair Bolsonaro over fuel prices. On Sunday, Bolsonaro’s choice to be the chairman of the public giant’s board, Rodolfo Landim, also dropped his name.
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The turnaround comes a few days before the company’s shareholders’ meeting to elect the new board of directors, scheduled for April 13. Petrobras’ articles of association stipulate that the CEO must be a member of the board of directors. Petrobras fell 2.3% and hit session lows in Sao Paulo after O Globo first signaled the withdrawal of Pires.
Pires’ move came amid speculation about potential conflicts of interest related to years of work as a consultant for private oil and gas companies, some of which have businesses that compete with the state-owned company. Landim, meanwhile, is being questioned by prosecutors for the alleged fraudulent management of an investment fund that caused losses to the Petrobras Petros pension fund.
Latin America’s biggest oil producer will have its third CEO since early 2021. Silva e Luna was expelled following growing political pressure to contain fuel prices, the same reason his predecessor Roberto Castello Branco was ousted from office a year ago.
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The fuss from leaders underscores how difficult it is for developing countries – where transport spending takes up a bigger chunk of household budgets – to pass the costs on to consumers when prices rise. Whoever assumes command of Petrobras will be tested in an election year when politicians on all sides are looking for someone to blame for the pain at the pump.
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