Brazil's President Jair Bolsonaro
Brazil’s benchmark Bovespa index fell more than 4% Monday in the wake of President Jair Bolsonaro's decision last week to replace the chief executive of state oil company Petrobras.
The company's shares plunged more than 21% on news that the government on Friday nominated an army general with no oil and gas industry experience as its new CEO.
In only a few hours, Petrobras lost more than 74.2 billion reais ($13.6 billion) in market value. On Friday, shortly after the announcement, the company’s value had already shrunk by 28.2 billion reais ($5.2 billion), according to financial market analysts.
Petrobras’ preferred shares closed Monday with a loss of 21.5% at 21.45 reais ($3.92). The company’s common shares plunged 20.47% to 21.55 reais ($3.94).
Venezuela’s president on Monday denounced international sanctions against his country, saying they have limited the government’s ability to fight the health and economic effects of the COVID-19 crisis.In his speech at a virtual session of the UN Human Rights Council, Nicolas Maduro repudiated the more than 450 unilateral sanctions imposed by the US and European Union on Venezuela, arguing they have stripped the government of at least US$30 billion in oil revenues, finanicial resources that could have been used to fight the pandemic.He added that the sanctions are not only illegal but also the cause of the humanitarian crisis currently unfolding in the South American nation.Georgia's new premier, cabinet win confidence voteUN envoy for Libya calls for compliance with cease-fireHowever, he assured the Council that Venezuela is successfully controlling the effects of the pandemic thanks to the social protections offered by his government as well as its free health care system.On Sunday, Maduro announced four new COVID-19 related deaths and 465 new cases in Venezuela, taking the total number of fatalities in the country to 1,316 and the total number of infections to 136,068.He said the country currently has 6,664 active cases, or 20 per every 100,000 citizens, and that his goal is to lower the number of cases to just 10 per 100,000 citizens.This week, the Venezuelan government will start its vaccination campaign after receiving 100,000 doses of Russia’s Sputnik V vaccine last week.Venezuela’s Vice President Delcy Rodriguez said Sunday that these vaccines show that “despite the blockage, the country is addressing the pandemic efficiently and rapidly.”US sanctions two Myanmar generals over protest responseDRC president urges justice for murder of Italian envoy
Maduro denounces impact of sanctions on fighting COVID
Israeli President Reuven Rivlin received Egyptian Petroleum Minister Tareq Al-Mulla at his office Monday for talks on the situation in the Gaza Strip, the local Hebrew daily Maariv reported.Rivlin described Al-Mulla's visit to Israel as “important” and “timely” when more Arab countries have taken the path of normalization with Israel “that began more than 40 years ago with the signing of the Israeli-Egyptian peace agreement."During the meeting, Rivlin said efforts to resolve the humanitarian situation in the Gaza Strip should continue in order to bring “our children” back to Israel, he said, referring to four Israelis being held by the Palestinian resistance group Hamas.Israel has imposed a land and sea blockade on the Gaza Strip following Hamas’ victory in legislative elections in 2006.The move has created harsh economic and living conditions for more than 2 million Palestinians living in the Strip.Hamas is holding four Israeli prisoners, including two soldiers captured during the Israeli war on Gaza in the summer of 2014. Hamas has demanded the release of Palestinian prisoners held by Israel in exchange for the Israelis.On Sunday, Al-Mulla arrived in Israel and met with Israeli Prime Minister Benjamin Netanyahu for talks on bolstering bilateral cooperation in the field of energy, the first by an Egyptian minister in the last five years.*Ibrahim Mukhtar from Ankara contributed to this report
Israel, Egypt discuss situation in Gaza
It marks the biggest percentage drop in shares since March 9, 2020, when preferred shares plunged 29.7% due to the coronavirus crisis, which was recorded as Petrobras’ worst daily devaluation in history.
With the devaluation, the capitalization of the giant oil company fell from 354.79 billion reais ($64.91 billion) on Friday to 280.55 billion reais ($51.33 billion).
Banco do Brasil and Eletrobras also accumulated significant losses. Both are also state-owned.
Bankers and investment fund managers said Monday that Petrobras’ losses with Bolsonaro’s intervention could be higher than those incurred from the corruption schemes investigated by Brazilian federal police under Operation Car Wash of 85 billion reais ($15.6 billion) over a four-year period.
Bolsonaro proposed the appointment of General Joaquim Silva e Luna, the current director of hydroelectricity generator Itaipu Binacional, as CEO of Petrobras. If confirmed, Silva e Luna will replace Roberto Castello Branco.
Georgia’s parliament voted Monday to approve new Prime Minister Irakli Garibashvili and the cabinet he put forward.Garibashvili's government won a vote of confidence with 89 votes cast by lawmakers from the ruling Georgian Dream party.Garibashvili had served as defense minister in former Prime Minister Giorgi Gakharia's cabinet since 2019, as interior minister from 2012-2013 and as prime minister from 2013-2015.Only the regional development and infrastructure minister has changed in the new cabinet.Most of the opposition parties do not accept the results of a general election held on Oct. 31, 2020, demanding a reorganization of the polls.UN envoy for Libya calls for compliance with cease-fireUS sanctions two Myanmar generals over protest responseThe seven parties that passed the election threshold and qualified to enter parliament are boycotting the parliamentary sessions.- Resignation of Prime Minister GakhariaGakharia announced his resignation last Thursday.He told reporters in the capital Tbilisi that he quit due to differences of opinion with his team on an arrest warrant issued for Nika Melia, the head of the main opposition United National Movement, who is accused of organizing “mass violence” during anti-government protests in 2019.Criticizing the decision to arrest the opposition leader, Gakharia said it will further fuel political tensions in the country.The Georgian Interior Ministry announced that the operation to arrest Melia was temporarily postponed after Gakharia’s resignation.Other opposition parties had also criticized the court order to arrest Melia.DRC president urges justice for murder of Italian envoyItalian FM holds phone call with DRC counterpart
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UN envoy for Libya calls for compliance with cease-fire
The proposed change has been drawing much criticism from economists, politicians and even former members of the government. They fear the company will return to record losses due to subsidies and have a less-skilled management when exchanging an economist for a general.
On Saturday, Bolsonaro said he could intervene in other state-owned companies.
“If the press is concerned about yesterday's [Friday’s] exchange [in Petrobras], next week we will have more. What I don't lack is the courage to decide, thinking of the greater good for our nation,” he said during a military event.
For the replacement to be confirmed, Bolsonaro’s nominee needs to be approved by Petrobras’ Board of Directors. According to the company, its board will hold a meeting scheduled for next Tuesday, when a decision is expected to be made.
Financial agents see a significant increase in political risk in the country, mainly due to government interference in state-owned companies. The announcement came after Bolsonaro had criticized Petrobras' management and successive increases in fuel prices. The president called the latest price readjustment, 2021’s fourth, with gasoline rising 10% and diesel 15%, “out of the curve.” Until last Thursday, the price of a liter of gasoline at refineries had risen 34.78% since the beginning of the year. The price of diesel rose 27.72% in the same period.
At filling stations, gasoline has become 5.8% more expensive since the first week of 2021, sold at 4.833 reais ($0.89) per liter on average, according to a weekly survey by the Brazilian National Agency of Petroleum, Natural Gas and Biofuels (ANP). Diesel was sold at an average price of 3.875 ($0.71) per liter at the pumps.