Brazil's Petrobras cedes control of fuel distributing unit

RIO DE JANEIRO (AP) — Brazilian oil giant Petrobras sold off its majority share in the company's fuel distribution branch, following up on President Jair Bolsonaro's campaign promises to implement a liberal economic agenda.

Petrobras said Wednesday the offer had already raised 8.5 billion reais ($2.26 billion), with its stake in the Petrobras Distribuidora unit reduced to 41.25 percent, down from the 70 percent it previously owned.

The company hopes to raise as much as 9.6 billion reais (about $2.5 billion), which would further reduce Petrobas' stake to 37.5 percent. The shares were priced late Tuesday at 24.5 reais (about $6.525) each.

Gilberto Braga, a finance professor at the Ibmec university in Rio de Janeiro, said the sale of one of Petrobras' most valuable assets sent a strong and positive message to investors, that Bolsonaro is following through with his campaign promises.

Bolsonaro was elected in October with promises to pass liberal economic reforms, from privatizations to an overhaul of the country's generous pension system.

A month after the election, before being sworn into office, Bolsonaro named Roberto Castello Branco, a pro-market reformer, as chief executive of state-controlled Petrobras.

Castello Branco had previously advocated a wholesale privatization of Petrobras, but privatization remains polemical in Latin America's largest nation and experts say the company is more likely to give up control of non-core activities, such as distribution, gas or refining.

"There is resistance within the government, from those who want to maintain the absolute control in the hands of the state," Castello Branco said.