Brazil’s Bolsonaro to oust Petrobras CEO after fuel pricing spat

Roberto Castello Branco, the CEO of Brazil’s state-run oil company Petrobras. (File/Reuters)
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Updated 20 February 2021

Brazil’s Bolsonaro to oust Petrobras CEO after fuel pricing spat

  • The government said it had decided to appoint former Defense Minister Joaquim Silva e Luna to run Petroleo Brasileiro SA

RIO DE JANEIRO: Brazilian President Jair Bolsonaro moved to replace the head of state-run oil company Petrobras, naming a retired army general with no oil and gas experience as CEO after weeks of clashes with the current chief executive over fuel price hikes.
In a late Friday statement from the Mines and Energy Ministry, first shared on Bolsonaro’s Facebook page, the government said it had decided to appoint former Defense Minister Joaquim Silva e Luna to run Petroleo Brasileiro SA , as the firm is known formally.
Current CEO Roberto Castello Branco, backed by investors for his efforts to sell underperforming assets and cut debt, would be the second Petrobras leader in three years to fall over the political fallout from fuel pricing. In 2018, then-CEO Pedro Parente resigned when the government forced fuel prices lower in a concession to striking truckers.
Parente vowed to set domestic prices in line with global markets, breaking with a policy that made Petrobras sell fuel below international parity, triggering some $40 billion in losses from 2011 to 2014.
Similarly, Bolsonaro tangled with Castello Branco over his insistence on raising prices for diesel and other fuel as Brazil’s currency weakened and global crude prices surged. Petrobras ADRs traded in New York slumped 8.9% in after-hours trading on Friday, adding to the day’s drop of nearly 7% in its Brazil-listed preferred shares.
Petrobras has been raising fuel prices since a Feb. 5 Reuters report disclosed details of the company’s price policy, which led analysts to downgrade its shares on concerns of possible political interference.
Castello Branco’s ouster could force a broader shakeup at Petrobras, which has steered toward more market-friendly and less politically driven policies in recent years.
The company’s senior management is considering resigning en masse to protest the CEO’s replacement, three people close to the executives told Reuters on Friday evening.
Petrobras said in a statement that it had received notice from the Mines and Energy Ministry about the proposed CEO change, adding that the ministry had requested an extraordinary shareholders’ meeting.
The company’s board of directors is to meet on Tuesday in a regularly scheduled session.
Most of the board has so far proven loyal to Castello Branco, although the majority are government appointed, which could create a messy transition.
Castello Branco, whose current mandate officially expires on March 20, was appointed to lead Petrobras when Bolsonaro took office at the start of 2019.
A University of Chicago-trained economist and ally of Economy Minister Paulo Guedes, he is a strong advocate of free-market policies and has previously rebuffed the president’s complaints about prices.
But investors have been jittery about possible political interference since the oil producer confirmed it was selling fuel in Brazil below international prices for longer periods than previously disclosed, confirming a Reuters report.
The possible shakeup of senior management also puts in doubt one of the CEO’s main goals: ending Petrobras’ near monopoly in refining in Brazil, three source close to bidders said.
Silva e Luna, who has won frequent praise from Bolsonaro for his management of Brazil’s massive Itaipu hydroelectric dam on the border with Paraguay and Argentina since 2019, is little known to investors.
He would be the third military figure to occupy a key energy post: the president of Petrobras’ board and the nation’s Mines and Energy minister are both admirals.
In April 2019, just months after Bolsonaro took office, the president demanded explanations for Petrobras’ price hike, which was swiftly reversed. After company shares tumbled, Petrobras and the government assured investors that there would be no political interference in fuel pricing.
Tensions eased last year as crude prices tumbled, but truckers have renewed their complaints in recent months.
During a late Thursday announcement about lower fuel taxes, Bolsonaro made clear his dissatisfaction with Castello Branco, saying there would be changes at Petrobras “in coming days.”
Analysts and investors were jarred by the quick succession of events on Thursday and Friday.
“It’s a delicate situation, and it happened in such a disorganized way,” said Edmar de Almeida, a professor specializing in energy at the Federal University of Rio de Janeiro.
Petrobras will complete 67 years in 2021 and will have its 39th CEO — or about one head every 18 months, said UBS analyst Luiz Carvalho.
The company’s issues will persist as long as its controlling shareholder — the government — does not understand that the problem is not with the company’s executives, but with the lack of a coherent strategy from above, he said.
“While the world is moving toward an energy transition with a cleaner energy mix, in Brazil we are discussing subsidies for diesel consumers,” Carvalho said.


Pakistan keeps petrol prices unchanged despite global rate hike

Updated 28 February 2021

Pakistan keeps petrol prices unchanged despite global rate hike

  • Oil regulatory body recommended prices of petroleum products be increased to between Rs6 and Rs7 per liter
  • Suggestion rejected by Prime Minister Imran Khan

ISLAMABAD: Pakistan’s Prime Minister Imran Khan on Sunday turned down a proposal by the country’s Oil and Gas Regulatory Authority (OGRA) to increase prices of petroleum products, Special Assistant to Prime Minister on Political Communication Shahbaz Gill said in a tweet.
According to a document, also shared by Gill on his Twitter, the OGRA had recommended that the prices of petrol, high speed diesel, kerosene and light diesel be increased by various amounts between Rs6 and Rs7 per liter.
“...Prime Minister Imran Khan did not accept this proposal. There has been no increase in the prices of petroleum products. Despite the continuous rise in the prices of petroleum products in the world market, the prime minister did not allow it,” Gill tweeted.
The new prices would have been effective from March 1. Prices are generally revised every 15 days.
Earlier this month too, the regulatory authority had proposed an increase in petroleum prices but Khan turned the suggestion down. This was a break from continuous price hikes for the last five consecutive fortnights and came despite an increase in global oil prices over the last two weeks.


KPMG: 98% of Saudi CEOs set to invest in cloud technology in 2021  

Updated 28 February 2021

KPMG: 98% of Saudi CEOs set to invest in cloud technology in 2021  

  • Artificial intelligence, robotic process automation and 5G also set for more investment, according to survey
  • 88% of Saudi-based CEOs see technological transformation as an opportunity rather than a threat

JEDDAH: Senior company executives in Saudi Arabia are embracing the digital revolution, with 98 percent planning to raise their investments in cloud computing this year, according to a new survey.
Cloud computing is at the top of the technology agendas for CEOs in the Kingdom, with investments in artificial intelligence, robotic process automation and 5G also popular, according to the global consultancy firm KPMG’s 2020 CEO Outlook survey.
While technological advances can bring security challenges, 88 percent of Saudi-based CEOs see technological transformation as an opportunity rather than a threat.
“The pace of technological adoption has quickened this year as organizations react to the new working reality. Most of the CEOs believe the pandemic has accelerated the creation of a seamless digital customer experience and [that the] creation of new digital revenue streams has advanced during the pandemic,” said Mazhar Hussain, chief disruption officer at KPMG in Saudi Arabia.
“Nonetheless, the pandemic has seen an uptick of cyberattacks, which has increased awareness and investment into cybersecurity. The number of vulnerabilities in most organizations’ operations has increased with remote work. Hence, companies must resist the urge to direct budget cuts toward preventative cyber measures and [view] the sharp increase in global cybercrime as a reason to keep advancing their cyber defenses,” he added.
At the same time, the pandemic has shaken CEO confidence in global economic growth, according to the KPMG survey. Almost 32 percent said they are less confident about global growth prospects in the next three years than they were at the beginning of the year.
While cloud computing investment is a priority, a survey in January by German business software company SAP found that while more than four-fifths (89 percent) of Saudi senior public sector executives agreed that data sharing helped them to improve on how they connected with citizens, many had not invested in training to implement this.
SAP found that while 83 percent of respondents said data sharing improved their innovation in current goods or services, only 22 percent did this with partners. And when it came to training, only 33 percent of respondents had retrained employees on how best to analyze data. This skills shortage was cited by 61 percent of respondents as being a barrier to meeting strategic change initiatives.


Saudi fast-food chain Herfy expands in Bangladesh

Updated 28 February 2021

Saudi fast-food chain Herfy expands in Bangladesh

  • Herfy inaugurated its first branch outside the Middle East under a franchise system in Bangladesh in December 2017
  • Herfy Food Services Company was established in 1981, and the first Herfy restaurant opened in Riyadh that same year

JEDDAH: Herfy Food Services Company, Saudi Arabia’s largest fast-food chain, has opened its fifth restaurant in Bangladesh, following the success of previous branches in the capital city.
The financial impact from the opening will reflect in the first quarter of 2021, the company said in a Tadawul statement.
Herfy inaugurated its first branch outside the Middle East under a franchise system in Bangladesh in December 2017. 
According to an agreement signed with Bangladeshi private-sector company Greenland Services Ltd. in 2016, Herfy aims to open 30 outlets within “a few years.”
In 2020, Herfy reported an estimated annual net profit after zakat and tax of SR 53.6 million ($14.29 million), a drop of 73 percent year-on-year, as revenue for the year fell 16.6 percent to SR 1.074 billion.
Herfy was hit by the closure of its restaurants in malls and shopping centers. Moreover, working hours at stores had been reduced while administrative and general expenses had increased.
At its Bangladesh branches, Herfy offers training for employees and provides its franchisees with its own products, including meat, chicken and sauces — all made in its Saudi-based factories.
Herfy Food Services Company was established in 1981, and the first Herfy restaurant opened in Riyadh that same year. As of September 2020, the company owns a total of 40 restaurants and leases 345.


Huge surge in GCC demand for Ivy League university coaches

Updated 28 February 2021

Huge surge in GCC demand for Ivy League university coaches

  • Companies like Crimson Education coach students on how to improve their chances of being one of the few who receive an offer letter
  • Demand can differ from country to country, with those in the UAE preferring British institutions

DUBAI: Getting into a prestigious Ivy League university is no easy task. 
According to the latest figures, California’s Stanford University was especially picky, with a 2019 acceptance rate of just 4 percent. Columbia and Harvard followed with 5 percent, while Princeton and Yale were slightly easier with 6 percent of applicants getting offers.
The race to get these coveted places is also getting harder as the number of applicants has gone up and universities have become even stricter. Dubai-based Crimson Education has reported a surge in clients looking for help to gain access to institutions in the US, as well as into Oxford and Cambridge.
“The number of students who joined Crimson Education in the region over the past six months was 200 percent up from the same period the previous year,” Soraya Behesti, regional director for the Middle East and Africa at Crimson Education, told Arab News. “The company had a big push to hire new strategists in order to meet the surging demand. Crimson grew 250 percent from 2019 to 2020 and is projected to grow more than 150 percent this year.” 
The demand makes sense. 
A 2015 report from the US Department of Education found that the average salary of Ivy League graduates a decade after they finished university was $70,000 a year, compared to the average salary for non-Ivy League graduates of $34,000.
Companies like Crimson Education coach students on how to improve their chances of being one of the few who receive an offer letter, and Behesti said the acceptance rate among their clients was three times the global average.
There are also a number of trends which has seen demand for such services skyrocket in recent years.
“The number of students who applied early to Ivy League colleges skyrocketed in 2020, although the acceptance rate reached record lows,” Behesti added. “Applications to Columbia and Harvard’s early rounds increased from the previous year by 49 percent and 57 percent, respectively. Applying early to their top-choice university usually gives students an advantage but last year, the early round acceptance rate was closer to that of the regular round, with Harvard admitting just 7.4 percent of early applicants, from 13.9 percent in the previous year.”
Students have started enrolling for help earlier because of the increased competition, and Behesti said Crimson had seen a rise in demand from clients as young as nine.
“When we work with students from a young age, our sessions and objectives are not focused on universities per se, but building really strong foundations, developing a growth mindset, cultivating good study habits, learning entrepreneurial thinking and even developing core skills such as coding, debate or languages.”
Demand can differ from country to country, with those in the UAE preferring British institutions, while Saudi students show a preference for US ones, especially Columbia, Harvard and Yale. 
Having the right aptitude is good, but money also really counts. Crimson said that studying at an Ivy League university cost between $30,000 and $45,000 per year, although between 40 and 60 percent of students received some form of financial aid.
“For GCC students, governments offer attractive scholarships — but usually only for students who gain admission to the top 100 universities. We have worked with Emirati and Saudi students of all abilities, from A-grade academics to students struggling at school, to ensure their admission to the top 100 schools through academic tutoring, admissions support and extra-curricular coaching, thereby allowing them to receive government scholarships,” Behesti said.

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South African mobile operator MTN eyes $65mn deal for Syrian business

Updated 28 February 2021

South African mobile operator MTN eyes $65mn deal for Syrian business

JOHANNESBURG: MTN Group remains committed to negotiating a $65 million sale of its 75 percent stake in its Syrian unit, the South African mobile operator said on Sunday, despite the business being placed under judicial guardianship last week.
MTN Syria was placed under guardianship by a court in Damascus over alleged MTN violations of the terms of its licensing contract, which the state says deprived the government of revenue.
MTN has denied the allegations and on Friday said that it intended to appeal.
The appointed guardian, who is chairman of MTN Syria minority shareholder TeleInvest, will be responsible for managing day to day operations while the guardianship order remains in place. The court’s statement did not indicate how long that might be.
TeleInvest had been lined up to buy MTN Group’s 75 percent stake in MTN Syria for a previously undisclosed price.
“MTN Group is still committed to executing on the agreed transaction with TeleInvest to dispose of its 75 percent shareholding and loans for a consideration of $65 million in total,” a spokeswoman for the South African company told Reuters.
The sale to TeleInvest is part of MTN Group’s plans to exit the Middle East in the medium term.
The group’s operations in the Middle East have been marred by allegations that it used bribes to win a 15-year operating license in Iran and that it aided militant groups in Afghanistan.
MTN denies the allegations.
In the six months to June 2020, MTN Syria accounted for 0.7 percent of the group’s core profit.