Petrobras cuts prices to ease trucker protest

RIO DE JANEIRO/BRASILIA: Brazil’s state-led oil company Petrobras temporarily cut diesel prices by 10 per cent in order to help the government and truck drivers resolve a protest crippling highways. The surprise decision, aimed at resolving a standoff threatening grains exports, industrial output and even fuel supply at airports and gas stations, will bring immediate relief for angry truckers but raise investor concerns about government interference at Petroleo Brasileiro SA.

New York-listed shares of Petrobras fell as much as 7.5 per cent in after-market trading, after closing 3.8 per cent lower on Wednesday.

Petrobras Chief Executive Officer Pedro Parente said the price cut, which will only remain in place for 15 days and cost the company about 350 million reais ($96 million), had not been demanded by the government. “The independence of Petrobras has not been damaged,” Parente said at a news conference explaining the decision. “It was an exceptional measure and does not represent a change to our pricing policy.”

Near-daily price adjustments at Petrobras have let the company track global prices and turn a profit on fuel sales after losing money for years at the government’s insistence - part of a turnaround that lifted shares nearly 90 per cent since the pricing policy started last July.

While Petrobras’ price cut brings momentary relief to truckers, policymakers struggled to reach a more lasting accord during talks with the drivers’ representatives in Brasilia, who threatened to extend their protests into a fourth day. — Reuters