Lula’s Criticism of Petrobras Echoes 2002 Campaign

Unlike in 2018, economic issues are the voter’s main concern

A street vendor offers towels with the images of Jair Bolsonaro and Lula in Eldorado dos Carajás (PA).
February 06, 2022 | 10:34 AM

Bloomberg Línea — In August 2002, the PT candidate, Luiz Inácio Lula da Silva, chose to focus criticism on Petrobras’ (PETR4) foreign procurement policy in his first appearance on radio and TV election time. With about 42% of voting intentions against 26% for José Serra (a member of Brazil’s Social Democratic Party, or Tucano), according to Datafolha at the beginning of the electoral race, the Brazilian presidential candidate had called for Petrobras to build two giant platforms, P-51 and P-52, by domestic industry. At the time, Lula had already signed the Letter to the Brazilian People -- a set of the candidate’s commitments to fiscal responsibility.

Almost twenty years later, Petrobras is again at the center of the presidential dispute between Lula and Jair Bolsonaro, who is running for reelection. Again in the condition of opposition and leader in the polls, Lula began the year attacking the price parity policy of the state-owned oil company under Bolsonaro with the international market and the distribution of dividends to the company’s shareholders. In two interviews in recent days, Lula blamed the president for successive price hikes on fuel and cooking gas.

On Friday (Jan 28), Lula said he was not worried about the “New York stockholders” of the state-owned company. Soon after the statement, Petrobras shares had a drop of more than 2% in the trading session. On Thursday (Feb 3), he was again critical of the company’s pricing policy.

“We are not going to keep the price of gasoline at dollar levels. It is important that the shareholders receives dividends when Petrobras makes a profit, but I cannot enrich the shareholders and impoverish the housewives who buy a kilo of beans and pay more because of gasoline,” he said, in an interview to the RDR radio network, in northern Paraná.


In this year’s campaign, Lula has advocated that the state-owned company invest in refineries to reduce the country’s dependence on imports of oil derivatives while exporting crude oil. The current policy, which has been in place since Michel Temer’s administration, has been to disinvest in assets that are outside the core business, which is exploration and production.

In 2017, the former president was convicted by judge Sergio Moro for corruption and money laundering as part of Operation Lava Jato, which looked into the payment of bribes by companies that had contracts with the state-owned company. The sentence was confirmed in the second instance and Lula spent 580 days in prison. Last year, the STF (Brazil’s Supreme Court) overturned the conviction of Lula and considered Moro suspect in cases involving the PT politician.

WHY THIS IS IMPORTANT: The return of Petrobras to Lula’s discourse matches the findings of the electoral polls.


In the 2018 election, the year of Jair Bolsonaro’s victory, the main concerns were health (22%) and corruption (20%). Now, according to Datafolha published in December, unemployment (14%), the economy (12%), and inflation (7%) — correlated themes — add up to 33%, while health appears with 24%.

Another survey carried out by Ipec (formerly Ibope), in November last year, focused not on the elections but on the perception of the energy crisis with 2,002 interviewees all over the country, showed that 52% of those interviewed thought that the high price of gas was the one that most negatively affected the cost of living of families. In the Northeast, the index reached 63%. In the survey, 10% said they had changed the gas for firewood at some point in the last 12 months, and 6% said they had used charcoal to cook food.

Dealing specifically with electric energy, according to Ipec, 47% of respondents blamed the federal government for the increases in electricity bills.

THERE WILL BE NO NEW LETTER TO THE BRAZILIAN PEOPLE: So far, Lula has sought to position himself more to the center in this election. Lula has given signals that have pleased the business community and the financial industry, which mostly supported Bolsonaro in 2018. The former president has been trying to convey the message of moderation to counter Jair Bolsonaro.


The first gesture of contemporization was to seek the former tucano Geraldo Alckmin (now without party), his opponent in 2006, to be his vice presidential candidate. Lula has repeatedly said that his eventual government will have alliances outside the left-wing camp because, according to him, the country’s economic and social situation is worse than in 2003.

The former president recently said that he does not see the Central Bank’s autonomy as an “obstacle” and said that he intends to seek Roberto Campos Neto, should he be elected again.

Finally, the wide lead in the polls has allowed the former president to delay the choice or announcement of names for an eventual economic team. Former minister Guido Mantega, who signed an article sent to Folha de S.Paulo in January about the candidate’s economic ideas, declared last week that he will not take part in an eventual new PT government.


The idea of editing a new version of the Letter to the Brazilian People, committing to inflation control and fiscal discipline, is considered foolish by the candidate. Last year, in his first interview as a pre-candidate, he said that his legacy “is worth 500 Letters to the Brazilian People”.

“We took this country with $30 billion in debt to the IMF, 12% inflation, 12 million unemployed, and Malan, who was a good man, had to go to Washington every year to get money to close the account in Brazil,” said former President Lula, in October, flirting with Pedro Malan, Fernando Henrique Cardoso’s Finance Minister.

High fuel prices became the main feature of the Lula-Bolsonaro clashdfd

THE CONSTITUCIONAL FACTOR: The fuel issue has become a priority in the core that takes care of Bolsonaro’s reelection. Ministers from the centrist party told the president that the issue is fundamental to reverse Lula’s favoritism. The government — mainly Paulo Guedes’ economic team — resists the possibility of intervention in Petrobras’ prices.

The solution found so far to try to reduce the price of diesel and cooking gas was the preparation of a PEC (Proposal for Constitutional Amendment) to reduce taxes on fuel and, again, dispute between the so-called political wing — ministers linked to the Centrão — with the economic team.


The Civil House of Ciro Nogueira (PP-AL) and the President of the House, Arthur Lira (PP-AL) agreed that the matter should aim, in addition to federal taxes, also on a permission for states to reduce ICMS on fuel and gas until 2023 - which the governors resist.

The justification would be to mitigate the effects of the pandemic on the family budget. The tax relief would not require compensation with spending cuts or identification of a new source of revenue, as required by the Fiscal Responsibility Law, and will only have to present an estimate of the impact on the budget, be within the fiscal target and be included in the Annual Budget Law.

While government technicians were still discussing the impacts of these tax breaks, on the 3rd, congressman Christino Áureo (PP-RJ), from the government’s base in the House, presented a Fuel PEC. Technicians from the Economy and from Mines and Energy leaked to the press that the allied deputy’s proposal had not been previously discussed nor had the government’s endorsement. The impact would be 10.4 billion dollars in federal revenues.