This document discusses the mismanagement of Petrobras, Brazil's state-owned oil company, under the governments of Lula and Dilma Rousseff. It outlines how reckless investment policies, forced suppression of fuel prices, and corruption led to massive losses for the company. In 2014, Petrobras lost $21.6 billion due largely to tuition fees, asset devaluations, and failed projects like Comperj and Abreu e Lima refineries. The document argues that managerial incompetence was more responsible for Petrobras' losses than direct corruption. As a result of the weakening of Petrobras, the Brazilian economy and hundreds of thousands of jobs have been negatively impacted.

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BALANCE OF ROBBERY AND INCOMPETENCE MANAGEMENT OF
PETROBRAS
Fernando Alcoforado *
Recently, Petrobras has been the subject of successive scandals in the press involving
the purchase of two refineries (Pasadena and Okinawa) and the deployment of the
Abreu e Lima refinery in Pernambuco, Brazil. In all cases the authors emphasize the
incompetence of the federal government and Petrobras leaders who have purchased
detrimental to the interests of the company and the country itself and the existence of
corruption proven by “Operação Lava Jato” of Federal Police.
The mismanagement of the current Petrobras power holders is proven also to note that
in spite of the oil production records and sales growth of its derivatives from 2003 to
2013, gains or company profits stagnated in this period. Besides presenting a mediocre
financial performance, Petrobras was the victim, among other things, by the coordinated
action of a gang of contractors, bureaucrats, lobbyists and dozens of politicians who
robbed the coffers of the company.
While the total number of investors in the Brazilian Stock Exchange increased by 15%
from 2008 to 2013, the number of Petrobras shareholders decreased by 16% during the
same period. The containment of fuel prices imposed by the federal government to
combat the escalating inflation forced Petrobras to sell diesel and gasoline to domestic
market for less than he paid on importation. Implemented with the questionable purpose
of fighting against inflation by artificial freezing rates, containment of diesel and
gasoline prices that resulted in losses of R$ 7 billion in 2013 to Petrobras.
The results achieved by Petrobras recently resulting from the reckless management of
the company imposed by the government Dilma Rousseff. The company failed to meet
production targets, several times revised downward in recent years. Petrobras today is
worth about 40% than it was in 2011. Petrobras debt grew exponentially reaching R$
221.6 billion - up 50% only in 2013 - and its shares suffered sharp drop of about 60% of
its asset value. All this sets mismanagement, besides being also demonstrated a lack of
commitment from the federal government and responsible for the conduct of Petrobras
with the company interests and its shareholders and also with national interests.
The events perpetrated by the government Rousseff pledged the financial health of
Petrobras not only to prevent the capitalization of the company with the restriction for
several years the increase in fuel prices, particularly gasoline, to keep inflation under
control, but also by capitalization of the resulting Petrobras ill-fated purchase of the
Pasadena refinery in the United States and Okinawa in Japan and the construction of the
Abreu e Lima refinery in Pernambuco. Both the suppression of prices of petroleum
products to keep inflation under control as the purchase and construction of refineries
contributed to the continued decline in the value of Petrobras shares on the Stock
Exchange.
The balance of Petrobras presented in recent days shows that the ruin of the company
resulted not only from the robbery, but mainly of managerial incompetence of the
company. The 2014 balance data show that managerial incompetence was largely
responsible for the company's losses in the accounts of Petrobras than direct corruption.
This was the result of irresponsible policies of Lula and Dilma Rousseff governments
adopted in the oil sector. Managerial incompetence and rampant corruption at Petrobras

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resulted in the loss of R$ 31 billion in 2014. Corruption and mismanagement lead
Petrobras to losses for the first time since 1991.
The loss of Petrobras in 2014 was R$ 21.6 billion, tuition fees was estimated at R$ 6.2
billion and wrong investment decisions and management devalued assets at R$ 44.6
billion according balance data referring to 2014. In 2013, it was R$ 23.6 billion of
profit. The results in 2014 were committed by tuition fees, valuation of assets and large
projects that did not come out of the paper. The two main focuses of corruption were
also responsible for most casualties: Comperj (R$21.8 billion) and the refinery Abreu e
Lima (R$ 9.1 billion). Another R$ 2.8 billion were lost in project refineries in Maranhão
and Ceará.
According Vinicius Torres Freire, article writer for Folha de S. Paulo, "the investment
of Petrobras fell 17% from 2013 to 2014. The dizzying pace of the company's expansion
during the Lula and Dilma Rousseff governments was even unsustainable, touched by
the irresponsible borrowing base, forced march, similar to 1970s. The company's
relative debt rose nearly five times from 2010 to 2014, 1 to 4.77" [See the article
entitled Mais incompetência que corrupção (More incompetence than corruption)
published on the website <http://www1.folha.uol.com .br / fsp / market / 216,946-plus-
incompetence-that-corrupcao.shtml>].
The balance sheet reports that the investment of Petrobras will be in 2015 30% lower
than planned. In 2016, falls again to 14%. This situation is due to excessive debt, lack of
credit of the company in the market and, as explicitly says in the balance sheet of the
report, the fall in oil prices, the high dollar and the company's debt level. Petrobras will
get smaller by the grace of irresponsible governments of Lula and Dilma Rousseff. The
direction of Petrobras acknowledged the need to preserve cash and reduce investment, a
fact that can take it to seek partners for the pre-salt areas selling them part of the
exploration blocks.
The weakening of Petrobras caused by irresponsible governments is already resulting in
the sale of company assets, including the pre-salt and compromise the development of
Brazil considering it has a 13% share in GDP of the country. Due to weight of Petrobras
and the contractors in fixed capital formation in Brazil, this can lead to greater paralysis
in the Brazilian economy. Petrobras crisis is already generating a systemic problem that
will harm the suppliers companies of Petrobras (industries, consulting engineering and
contractors) that are already strangled. As a result of the weakening Petrobras, company
fundamental to the scientific, technological and industrial strengthening of Brazil, many
companies operating in the country responsible for more than 500,000 skilled jobs are
being decimated. This is the result of the Brazilian people put in charge incompetent
rulers of the nation who appoint leaders of corrupt companies.
*Fernando Alcoforado , member of the Bahia Academy of Education, engineer and doctor of Territorial
Planning and Regional Development from the University of Barcelona, a university professor and
consultant in strategic planning, business planning, regional planning and planning of energy systems, is
the author of Globalização (Editora Nobel, São Paulo, 1997), De Collor a FHC- O Brasil e a Nova
(Des)ordem Mundial (Editora Nobel, São Paulo, 1998), Um Projeto para o Brasil (Editora Nobel, São
Paulo, 2000), Os condicionantes do desenvolvimento do Estado da Bahia (Tese de doutorado.
Universidade de Barcelona, http://www.tesisenred.net/handle/10803/1944, 2003), Globalização e
Desenvolvimento (Editora Nobel, São Paulo, 2006), Bahia- Desenvolvimento do Século XVI ao Século XX
e Objetivos Estratégicos na Era Contemporânea (EGBA, Salvador, 2008), The Necessary Conditions of
the Economic and Social Development-The Case of the State of Bahia (VDM Verlag Dr. Muller
Aktiengesellschaft & Co. KG, Saarbrücken, Germany, 2010), Aquecimento Global e Catástrofe
Planetária (P&A Gráfica e Editora, Salvador, 2010), Amazônia Sustentável- Para o progresso do Brasil e

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combate ao aquecimento global (Viena- Editora e Gráfica, Santa Cruz do Rio Pardo, São Paulo, 2011)
and Os Fatores Condicionantes do Desenvolvimento Econômico e Social (Editora CRV, Curitiba, 2012),
among others.