Petrobras shareholders vote to pay extraordinary dividends

Shareholders of Brazil’s oil giant Petrobras approved in a Thursday general meeting the payment of around BRL 22 billion (USD 4.2 billion) in extraordinary dividends relating to Q4 2023, reversing a previous board decision and ending a long public dispute that seemed to threaten the job of chief executive Jean Paul Prates.

Early in March, Mr. Prates said on social media that the Petrobras board was “guided” by President Luiz Inácio Lula da Silva in choosing not to pay the so-called extraordinary dividends for Q4 2023. He argued, however, that this did not constitute political interference in the company, but that it was a legitimate act by board members.

Mr. Prates publicly opposed the retention of the extraordinary dividends, and abstained from a vote in which government-appointed board members rejected a proposal to pay the extraordinary dividends that minority shareholders were expecting. The disagreement between Mr. Prates and members of the Lula administration, such as Mines and Energy Minister Alexandre Silveira, led to a dispute over his job and speculation in the press that he could be fired.

On the day after the decision to withhold the extraordinary dividends, Petrobras shares plunged around 10 percent. In late March, Goldman Sachs told clients to bet against the performance of Brazilian state-controlled companies’ stocks. Instead, the bank told them to invest in private rivals of these companies, citing fears of political interference by the Lula administration.

Marcelo Gasparino, the representative of minority shareholders in the board, said in an interview earlier this month that there is a “political dispute” between groups inside the government about the fate of Petrobras investment — a perception that has spread across financial markets.

As the owner of about 28 percent of Petrobras’s stock, the federal government would make around BRL 6 billion (USD 1.1 billion) from the distribution of extraordinary dividends announced today, a much-needed, if insufficient, relief to its challenging fiscal situation.

In total, Petrobras announced today a distribution of BRL 94.3 billion (USD 18.2 billion) in profits, including both ordinary and extraordinary dividends.

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