3 Min Read
(Adds comments from executives, finance minister)
By Marta Nogueira and Rodrigo Viga Gaier
RIO DE JANEIRO, Oct 14 (Reuters) - Brazil's state-run oil company Petrobras said on Friday it was cutting fuel prices as part of a new policy tracking international benchmarks more closely after politically driven pricing cost the company billions in recent years.
Petroleo Brasileiro SA, as the company is formally known, will cut prices for diesel by 2.7 percent and gasoline by 3.2 percent on Saturday, helping to ease consumer inflation and bolstering expectations of an interest rate cut next week.
Interest rate futures fell in Friday trading <0#2DIJ:>, while preferred Petrobras shares rose 3 percent to a two-year high as investors cheered a more predictable pricing policy.
Chief Executive Pedro Parente told reporters in Rio de Janeiro that greater transparency will help lure buyers of refining and distribution assets now up for sale. Executives said they had sent more than 90 teasers to potential buyers of distribution unit BR Distribuidora, for example.
In a sign that new management is establishing greater space between Petrobras and the Brazilian government, Parente said the government had not been given details of the price changes ahead of Friday's announcement.
"The percentage change was not revealed, nor the direction of the change, whether it would be up or down," Parente said.
Finance Minister Henrique Meirelles said later on Friday that lower fuel prices would help to contain inflation.
Under former President Dilma Rousseff, whose finance minister was chairman at Petrobras, the company kept fuel prices artificially low to help cap inflation. As international prices surged past $100 a barrel, the company had to import fuel and sell it at a loss, resulting in billions of dollars in losses.
A drop in international crude prices has reversed the situation to an extent, with local prices sometimes higher than international levels, resulting in Friday's price cut.
Parente stopped short of providing a formula for how price adjustments are calculated, as some investors have called for, but said an executive committee will meet once a month to establish whether a price change is needed.
This process will look primarily at international prices, below which domestic prices will not fall, and Parente said investors should expect more frequent price adjustments than under previous management.
"I think that a clearer policy and the adoption of the monthly meetings will give greater transparency," Parente said. (Reporting by Marta Nogueira and Rodrigo Viga Gaier; Writing and additional reporting by Stephen Eisenhammer; Editing by Franklin Paul, Phil Berlowitz and Bernard Orr)