Brazil's Petrobras opens dividend gusher in pre-election win for Bolsonaro

Brazilian oil company Petrobras in Brasilia
A general view of tanks of Brazil's state-run Petrobras oil company following the announcement of updated fuel prices at Petrobras in Brasilia, Brazil June 17, 2022. REUTERS/Ueslei Marcelino/File Photo

RIO DE JANEIRO, July 28 (Reuters) - Petrobras (PETR4.SA) has approved a record dividend payout of 87.8 billion reais ($17 billion), Brazil's state-run oil company said on Thursday, a move that will boost the government's coffers heading into a tense election.

In a securities filing, Petroleo Brasileiro SA, as the firm is formally known, said its board approved a dividend payout of 6.732 reais per ordinary and preferential share. A first installment of 3.366 reais will be paid on Aug. 1 and the remainder is scheduled to be paid on Sept. 20, the company said.

The move comes shortly after the Brazilian government, which is by far Petrobras' largest shareholder, sent a letter to the company and other state-run enterprises asking them to increase dividends to finance extra federal spending.

The government's opponents have alleged President Jair Bolsonaro is trying to boost his re-election chances by ramming through a number of short-term spending measures. He is currently down against leftist former President Luiz Inacio Lula da Silva by nearly 20 percentage points in some polls, but other surveys indicate the race is much closer. read more

Both payments will be made before the first round vote, scheduled for Oct. 2.

On Thursday, Deputy Treasury Secretary Paulo Valle said that Petrobras has responded to the government's requests by saying it would not make "additional" payments and that it would stick to its current dividend policy.

That dividend policy, however, allows for hefty extraordinary dividend payments under certain situations, such as the one announced Thursday.

Brazil-listed preferred shares popped over 2% on the news, and closed up 3%. Brazil's benchmark Bovespa equities index (.BVSP) climbed 1.14% in intraday trade.

After market close, Petrobras reported a second quarter profit of 54.33 billion reais ($10.48 billion), smashing analysts' estimates, amid higher margins in its fuel prices and a global search for alternative sources of oil due to the war in Ukraine. read more

($1 = 5.17 reais)

Gram Slattery in Rio de Janeiro and Peter Frontini in Sao Paulo; Editing by Marguerita Choy and Richard Pullin

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Thomson Reuters

Washington-based correspondent covering campaigns and Congress. Previously posted in Rio de Janeiro, Sao Paulo and Santiago, Chile, and has reported extensively throughout Latin America. Co-winner of the 2021 Reuters Journalist of the Year Award in the business coverage category for a series on corruption and fraud in the oil industry. He was born in Massachusetts and graduated from Harvard College.