Agreement ensured return of fertilizer factories; TCU had warned of the risk of losses of almost R$500 million
A Petrobras On Friday (June 28, 2024) the custom industrialization contract (tolling) signed with Unigel in December 2023. The agreement ensured the resumption of activities at the oil company’s fertilizer factories that are leased (rented) to the company in the units of Camaçari (BA) and Laranjeiras (SE). It had a total value of R$759.2 million.
According to the state-owned company, the contract’s conditions for effectiveness were not met within the deadline established for Thursday (June 27). Therefore, it was terminated. “validity ended before it even took effect“. In a note, the company stated that it reiterated that the contractors are continuing to analyze a definitive, profitable and viable solution for the supply of fertilizers to the Brazilian market. Here is the full of the statement (PDF – 77 kB).
In January, the TCU (Federal Audit Court) had indicated “indications of irregularities”. He asked for the contract to be suspended and demanded explanations. of Petrobras. According to analysis by court technicians, the agreement could result in a loss of almost R$500 million to the state-owned company.
Among the possible irregularities, the TCU’s technical area listed flaws in the justifications for carrying out the deal, the lack of signature by higher authorities of the company on the contract and the fact that Petrobras assumed the risks of the business in an unfavorable market scenario.
In a February order, the minister Benjamin Zymler, rapporteur of the case, stated that, by maintaining the lease agreement while contracting Unigel on an outsourced basis to operate the factory, Petrobras “starts to supply gas and receive fertilizer, becoming responsible for its commercialization, assuming the burden of a loss-making operation of almost half a billion reais in a period of 8 months”.
The technical opinion stated that the contract violates the principles of efficiency, economy and reasonableness as it is a provisional solution in the face of other permanent possibilities. One of the reasons is that, at the end of the 8 months, the state-owned company will have to re-evaluate the issue again, “having to choose between extending the tolling contract indefinitely, which could cause even greater losses than any other definitive solution”.
UNDERSTAND WHAT IT IS TOLLING
Petrobras leased the Fafens (Nitrogen Fertilizer Factory) in Bahia and Sergipe to Proquigel, a subsidiary of Unigel, in 2019, during the government Jair Bolsonaro (PL). The contract is for 10 years. However, the company paralyzed the two fertilizer factories in 2023 due to lack of profitability.
The company is the 2nd largest petrochemical company in Brazil, but has been facing financial difficulties. From January to September 2023, the group accumulated a loss of R$1.05 billion. In the same period of 2022, the company had recorded a profit of R$491 million.
Jean Paul Prates’ management negotiated a way to resume production, since the Lula government had been demanding shares from the state-owned company in the fertilizer sector. The arrangement found for the short term was the tollingsigned at the end of 2023 and valid for 8 months.
By the agreement of tollingUnigel would continue to operate the two factories, which would have natural gas supplied by Petrobras. The final production would also be sold to the state-owned company. It would be as if the company were to operate the factory for the oil company on an outsourced basis.
The factories began operating in 2013 and together have enough installed capacity to meet 14% of the national demand for urea. Both reported deficits from 2013 to 2017. They were shut down in 2018 and only resumed with the lease to Unigel.
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