Petrobras yet to set time or size of fuel price hike

Rio De Janeiro

BRAZIL'S state-run oil company Petroleo Brasileiro SA has no date or size for a widely expected increase in the domestic price of petrol and diesel, the company said. In a filing with securities regulator CVM, Petrobras said on Wednesday: "Executives presented the board with indicators to serve as signposts for eventual adjustments in prices; the board oriented for the maintenance in prices."

The company's refining and supply division has lost more than 59 billion reais (S$30.22 billion) since the end of 2010, largely because the government refused to let it raise domestic fuel prices in line with world prices. With its 13 domestic refineries unable to meet all Brazil's rising needs, it must buy fuel abroad, selling imported petrol and diesel at home at a loss.

Refining losses have crimped profit and the company's efforts to pay for its US$221 billion five-year investment plan, increasing its debt. Petrobras is now the most-indebted major oil firm and its US$138 billion in debt is the fourth-largest of any industrial company, according to Thomson Reuters. Of the 28 largest oil companies, it is the least profitable.

The government has justified its resistance to fuel-price increases on the grounds that they would spark inflation. Brazil's consumer prices rose 6.75 per cent in October compared with a year earlier, a level above the government's own 6.5 per cent inflation target ceiling.

Rio de Janeiro-based Petrobras also said that it has scheduled its next board meeting for Nov 14 to discuss the company's third-quarter financial results. Petrobras also denied news reports that its auditor, PricewaterhouseCoopers (PwC) has refused to approve the company's accounts.

The reports said that the refusal was based on the auditor's insistence that Sergio Machado, president of Transpetro, Petrobras' international shipping and pipeline unit, step down. Mr Machado was reported to have been named by former Petrobras refining and supply chief Paulo Roberto Costa as one of several Petrobras executives involved in a scheme to channel money from the oil company to Brazilian political parties. REUTERS