Brazil's Petrobras calls meeting to elect Bolsonaro ally

RIO DE JANEIRO (AP) — Board members of Brazilian oil giant Petrobras on Tuesday paved the way for approval of a retired general with no industry experience to take the helm of the state-controlled company, sparking fears of government meddling in pricing.

President Jair Bolsonaro announced last week that former Defense Minister Joaquim Silva e Luna would take over the firm, seeking to appeal to truck drivers who have threatened to strike over recent increases in fuel prices and whose 2018 strikes brought the country to a standstill.

Following standard procedure, Petrobras’ board voted on Tuesday to summon an extraordinary general assembly in order to elect Silva e Luna a board member, replacing Roberto Castello Branco, the company said in a statement. Once elected, Silva e Luna can be named chief executive.

Analysts said the nomination signaled to investors that political interests would take priority over the financial health of one of Brazil’s most iconic companies, and Petrobras shares were pummeled. It also stoked the market’s fear that his administration’s free-market economic agenda, which includes ambitious privatization plans, could be compromised, at least until after his 2022 reelection campaign.

“If he (Bolsonaro) had dealt with it in a different way, it would have been a more natural path. The way Bolsonaro used his power ... generated some tension in the market,” said Lucas de Aragão, a partner at Brasilia-based political consultancy Arko Advice. “It’s a matter of broken expectations.”

Petrobras, a company wrapped up in the national identity, is also a major sponsor of arts and cultural events in Brazil. It is one of the major players exploiting the offshore pre-salt oil reserves, which former President Luiz Inácio Lula da Silva in 2008 called Brazil’s “passport to the...