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Jet fuel prices are the latest source of pressure for Petroleo Brasileiro SA as dissatisfaction with the Brazilian oil producer’s pricing strategy mount.
Silvio Costa Filho, minister of Ports and Airports, and Tourism Minister Celso Sabino are particularly concerned about jet fuel costs, which have boosted air ticket prices. Airlines have been in the government’s sights due to increasing fares, but the companies allege they ultimately depend on fuel costs — which are in the hands of Petrobras.
“We are working to combat abusive air ticket prices,” said Costa Filho, in a phone interview on Tuesday. “Aviation kerosene accounts for about 40% of the cost of flight in Brazil, while in the world, it’s about 20%.”
The two ministers are joining a choir for Petrobras to align its strategy with government’s efforts to fight inflation and boost Brazil’s economy, some of President Luiz Inacio Lula da Silva’s key election pledges. Dissatisfaction with the company’s chief executive officer Jean Paul Prates is growing within the government, according to people familiar with the situation.
Costa Filho and Sabino had a meeting with Mines and Energy Minister Alexandre Silveira on Monday to discuss jet fuel prices, following the lack of response from Petrobras to the ministers’ concerns, Costa Filho said.
In October, airfares rose nearly 24% from previous month likely due to rising fuel costs and higher pricing related to Christmas holidays. Overall, more expensive transportation was the biggest driver of monthly inflation, according to Brazil’s statistics agency.
Silveira has been vocal in calling for Petrobras to cut diesel and gasoline prices. During the weekend, Petrobras’ CEO rejected the minister’s plea, saying the oil producer will continue with its current price policy, making adjustments only when technical guidelines suggest the need for them.
Lula scheduled for Tuesday afternoon a meeting with Prates and several administration officials, including the finance minister, mines and energy minister and chief of staff to discuss Petrobras’s pricing and investment strategy.
Replacing Prates is not under discussion at the moment, according to the people, who requested anonymity to discuss internal matters.
Petrobras didn’t immediately respond a request for comment.
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