The supervisory board of state-controlled oil company Petrobras has called an extraordinary general shareholders meeting (EGM) to seek approval of top level management changes imposed by Brazil's President Jair Bolsonaro.

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A statement issued by Petrobras after the conclusion of Tuesday’s marathon supervisory board meeting confirmed that chief executive Roberto Castello Branco will stay in the position until 20 March— when his current mandate was due to expire — but the expected rollover of his contract will no longer take place.

Petrobras shareholders will be asked to approve the removal of Castello Branco and his replacement by retired army general Joaquim Silva e Luna, as ordered by Bolsonaro last week.

Petrobras also confirmed that terms of the seven executive directors will expire with that of Castello Banco on 20 March, but the company did not state if any or all of them will be reappointed.

Shares drop

Petrobras has suffered heavy stock market losses since Bolsonaro took the side of aggrieved truck drivers and intervened against Castello Branco’s aggressively laissez faire approach to fuel pricing.

In characteristic Bolsonaro style, the decision to replace Castello Branco was announced on social media, and just a month away from a date when his tenure could have been allowed to expire without conflict.

In another released statement, Petrobras rebutted Bolsonaro’s claims about Castello Branco awarding himself big salary increases.

“There has been no increase in the salaried remuneration of the (president of Petrobras) or the executive directors since 2016, and none is foreseen this year. The president and the executive board members have no power to increase their own salaries,” Petrobras stated, listing the procedures for corporate governance that must be followed for any such measures.

As the debate about Petrobras fuel prices raged, Bolsonaro criticised the man he appointed in 2019 to lead the oil giant for working from home during the Covid-19 pandemic.

Petrobras is due to announce quarterly results later on Wednesday and Castello Branco is expected to comment on his treatment — and the wider question of government interference — when he responds to analysts in a conference call scheduled for Thursday.

In an apparent attempt to signal his continued interest in market-led economic policies, Bolsonaro also announced on Tuesday a new legal measure designed to unblock the long-promised privatisation of federal electricity utility Eletrobras.

Castello Branco is the second Petrobras boss to fall from his position due to Brazilian truckers' anger about diesel price hikes.

Pedro Parente, who initiated the de-leveraging strategy that brought Petrobras back from the brink of bankruptcy, suffered the same fate in 2018.

Brazil's then president Michel Temer agreed to lengthen the period between fuel price adjustments, and Silva e Luna is expected to try something similar, or stricter controls.

Following his naming, Silva e Luna said Petrobras should "look after not only a few shareholders, but also Brazilians”.