Brazil's Finance minister to push for release of Petrobras' extra dividends

Lisandra Paraguassu and Bernardo Caram
2 min read
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By Lisandra Paraguassu and Bernardo Caram

BRASILIA, March 20 (Reuters) - Brazil Finance minister Fernando Haddad will ask President Luiz Inacio Lula da Silva to give the go-ahead for state-run oil firm Petrobras to release extra dividends to investors, two government sources with knowledge of the matter told Reuters.

On March 7, Petrobras withheld extra dividends anticipated by investors, who expected an additional payout of at least $3 billion on top of the normal dividends of about 14.2 billion reais ($2.8 billion).

That sent Petrobras shares plunging over 10% the next day, as Reuters reported that the decision to axe the payout came from Lula, igniting fears of political interference at the firm.

The government hoped Petrobras would be able invest the cash, two sources told Reuters, while Petrobras Chief Executive Jean Paul Prates insisted the money be set aside in a fund that would eventually be released to shareholders.

Haddad will argue the government would be the main beneficiary of the release, since it is the main shareholder, the sources said, and that the extra cash could be invested to advance Lula's intention to boost the economy and generate local jobs through public works.

The more likely outcome, however, is that the cash would be used to balance the federal budget, said the two sources.

Lula holds Haddad in high regard. Since Lula took office in 2023, Haddad has navigated difficult political situations in Congress while maintaining fiscal discipline despite friendly fire from the leftist president's political base.

Last week, Haddad sided with the Petrobras CEO during a meeting between both men, Energy Minister Alexandre Silveira and Lula, held after the tumble in the firm's shares.

After the meeting Haddad gained power to appoint a board member to Petrobras, and both Silveira and Haddad echoed Prates' own statements that cash set aside from last year's profit would eventually be used for shareholder dividends.

($1 = 5.0061 reais) (Reporting by Lisandra Paraguassu and Bernardo Caram, writing by Fabio Teixeira; Editing by Bill Berkrot)

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