Petrobras suspends refinery sales after Supreme Court ruling

Brazil’s state-owned oil giant had plans to sell four refineries

Brasília |
Brazil’s Supreme Court justice Lewandowski granted petition filed by union organizations: privatizations should be passed by the Congress
Brazil’s Supreme Court justice Lewandowski granted petition filed by union organizations: privatizations should be passed by the Congress - Marcelo Camargo/Agência Brasil

Brazilian oil giant Petrobras suspended on Tuesday the sale of four refineries, after a Supreme Court ruling last week. The state-owned company had announced last month that five private companies were interested in acquiring the plants.

Supreme Court justice Ricardo Lewandowski ruled in favor of two union federations’ petition for a preliminary injunction and established that any privatization process should first be passed by the country’s Congress.

Justice Lewandowski found the federations’ argument reasonable, considering state-owned companies are established by passing laws in Parliament.

The petitioners are the National Federation of Associations of Caixa Econômica Federal Bank Personnel (FENAE) and the National Confederation of Workers in the Financial Services Sector (CONTRAF).

Sergio Takemoto, a member of the CONTRAF board, sees Lewandowski ruling as a “great victory” that should be confirmed by other Supreme Court justices.

Takemoto believes the decision is especially meaningful for the country today, as it prevents Michel Temer’s illegitimate administration from making arbitrary decisions about the state-owned oil giant. On the other hand, he says that they should keep pressuring Parliament members, as most of them have made it clear they are not concerned about “the people and society’s well-being.”

“The government will do everything they can [to overturn Lewandowski’s decision]. It’s a preliminary injunction, we don’t know how long it will last. For us, it’s a victory, because it brings up the question once again. Polls show the majority of the population does not approve selling state-owned companies,” he says.

Takemoto says they are hoping the country’s upcoming elections in October will be a chance to elect new members of Congress, not reelect the old members who are pushing the privatization agenda. “The big fight [against privatization] will take place in October.”

Cloviomar Caranine, an analyst at the Department of Statistics and Socioeconomic Studies (DIEESE) and advisor for the Unified Federation of Oil Workers (FUP), points out that Michel Temer’s initiatives to sell state-owned corporations go against the new global trend.

Caranine says the ideal decision-making model regarding privatizations should make sure the people are directly involved in it, through plebiscites and referenda.

“Several countries, including some that are not at all ‘communists,’ such as England, the US, and France, are renationalizing their water supply and waste water treatment companies, for example. The military – that is, the State – is very involved in the energy system in the US. It was the right decision [by the Supreme Court justice]. It will be important to push the conversation from now on about how we choose our legislative representatives,” Caranine adds.

Petrobras was planning to sell 60 percent of four of its refineries, two in the northeast and two in the south region of Brazil. The measure could lead to increasing prices of oil products in Brazil in the long run.

In addition to refineries, the government has plans to privatize supplier of LP gas Liquigás and, in other industries, electric utilities company Eletrobras, airport operator Infraero, and state-owned bank Caixa Econômica Federal.

Edited by: Juca Guimarães | Translated by Aline Scátola