SAO PAULO, May 15 (Reuters) – Brazilian state-run oil giant Petrobras (PETR4.SA) is moving closer to making changes to its fuel pricing policy and executives are set meet this week to analyze a new model.
Petrobras said in a statement on Sunday it was “internally discussing making changes to its pricing policy for diesel and gasoline, which will be analyzed by executive management early this week and might result in a new commercial strategy.”
President Luiz Inacio Lula da Silva, who was elected last year, pledged to change the firm’s current policy of pegging local prices to international rates, such as global oil prices and foreign exchange, in a bid to make fuel cheaper.
Lula has previously said Petrobras needed to take local factors into account while setting fuel prices rather than just tracking an import parity price.
The firm, formally known as Petroleo Brasileiro SA, added that potential changes would be based on “technical studies and governance standards,” but did not provide further details.
The current policy was adopted in 2016 under former President Michel Temer.
His successor, Jair Bolsonaro, formally maintained it during his administration, although harshly criticizing the model when prices rocketed last year, driving inflation higher and ultimately hurting his failed re-election bid.
Executives have said the new proposal would maintain the firm’s competitiveness in the local market, but investors remain wary of a model that could see the firm scrapping its official import parity, considered key for recent bumper profits.
Analysts at JPMorgan said that any changes limiting Petrobras’ ability to follow international benchmark prices would be negatively received by investors, unless it comes with a clear and credible funding or compensation mechanism.
“If the new policy does not lead prices away from international benchmarks, this may even be well received.”
Chief Executive Jean Paul Prates told reporters last week the company would continue to base its prices on an international reference, but with no specific “international parity”. He noted discussions would happen this week but declined to “give out any spoiler”.
Reporting by Gabriel Araujo; Editing by Sharon Singleton
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