If there’s a company that lately hasn’t left the news, it’s Petrobras (PETR4).
Whether by its latest result (a record net profit of R$ 44.561 billion in the first quarter of this year), or because of its troubled “relationship” with the federal governmentthe company seems to attract the headlines of newspapers and portals of an economic or political nature.
And apparently, this trend of being the “most talked about” should continueat least in the medium term.
And this happens, in my point of view, for a reason that is easy to understand, but difficult to resolve: we are talking about a state-owned company, of a strategic nature for the Brazilian governmentbut which is publicly traded.
This is an issue that I have always considered complex, and the current moment only confirms this.
After all, how to reconcile the interests of the government and the financial market at the same time, especially when interests are antagonistic?
benefits of being state
In moments of calm in the market, when everything is going well, with the economy running smoothly and inflation under controlinterests generally tend to converge towards the same objective.
The more a state enterprise profits, the greater the result for government accounts. And greater ends up being, at least in theory, the benefits that return to the population.
This is the ideal design to have a company controlled by the Union, but which manages to capture the “cheap” money from the stock market.
However, the “ideal world” rarely lasts for a long time here in Brazil.
When privatization comes in as a way out
And when economic stability comes into question, It is common to begin to see the interests between investors and public managers go in opposite directions. This is easy to understand when we look at Brazil in 2022.
First, we had the whole financial crisis caused by the pandemic of Covid-19. As a result of low interest stimulus policycoupled with a break in the supply chain of inputs worldwide, we have seen inflation return to alarming levels, both in the Brazil as in the world.
And when the economies sketched a reaction, came the fateful war between Russia and Ukrainewhich further pressured the commodity price.
In the midst of all this, the price of a barrel of oil soared, which helped Petrobras with its historic profit described above. And a large part of this result came with the pricing policy of the state-owned company, which is to maintain parity of its prices with the international market.
All very correct when we look at the company from the business point of view. But we are talking about a state-owned company of strategic interest, remember? That’s where all the confusion we’ve been seeing lately begins.
Petrobras CEO Changes
During the Bolsonaro government, the company will have its fourth presidentthe last one being Jose Mauro Ferreira Coelhostayed a little over 2 months in charge of the company.
And all the exchanges had in common a discontent on the part of the government precisely in the constant price readjustments that the company has been practicing on fuels.
But the fact is that, in today’s model, the government cannot interfere in the company’s pricing policy, because there are legal norms that prevent you from doing so. And the various changes in the presidency prove this, as Petrobras continued to make its readjustments, even with a delay at times.
From a marketing point of view, what is happening with the company is greatO. It shows a good degree of independence and the management’s willingness to deliver good results. However, until proven otherwise, it remains state-owned, with the Union having most shares under its control.
That’s why it bothers you with the company to seek only profit at that moment, blocking the government’s needs from use it as a monetary policy instrument.
What is the solution for Petrobras?
And what is the solution to all this? Define whether or not the company should continue to be state-owned would be the best wayin my point of view.
If it is to be publicly traded, which privatize and establish strict controls, in addition to the implementation of company taxes to compensate the government and the population.
If it is to remain state-owned, strategic and political, then close its capital and find other ways to raise funds when they are needed.
It might even seem like a bit of a radical suggestion. But the middle ground that is being made today does not seem to be being much celebrated, both by the government and by the population.
And even investors, who are benefiting from the company’s management, live with the famous flea behind their ear with the possibility of interference in the long term.
Anyway, when we have dissatisfaction on all sides, it is clear that the current model is running out. And what will be the fate of the company after that? That’s talk for our professional politicians.
Take the opportunity to check out all of Beto Assad’s columns here at Money Times.
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