Brazil's state owned Petroleos Brasileiro SA remains ensnarled in a fiscal crisis.
Petrobras is delaying payment of employees' wages as well as money owed suppliers. That comes after the state company cut its capital budget to $1.4 billion from $2.9 billion earlier this year (OGJ, July 6, p. 38).
Petrobras also is considering selling assets and delaying some tax payments to ease its financial crunch.
The company issued a memo to employees that said, "The company's financial position is extremely critical, and the cash flow situation has become almost untenable."
Until 1991, Petrobras paid all employees on the 25th of each month. That changed last year to a system under which 40% of salary due was paid on the 10th and 60% on the 25th. Starting last August, 40% of wages due are paid on the 15th and the remainder the last day of the month. The company's payroll is $120 million/month. The latest austerity measures follow the company's decision to exercise its 1 year call option on its first Eurobond issue, placed for $250 million July 10, 1991, and to replace that bond partly with an innovative 2 year floating rate note for $140 million, placed July 16, 1992.
PETROBRAS MEMO TO GOVERNMENT
Brazilian newspaper O Globo reported that in a memorandum from Petrobras Pres. Benedicto Moreira to Brazilian Mines and Energy Minister Pratini de Moraes, Petrobras proposed the asset sales and deferred tax payments along with recommendations for reduced purchases of equipment and materials. The memo also called for urgent negotiations with Brazil's Central Bank for help with the $850 million Petrobras owes abroad.
The company's short term debt totals $13 billion, and interest on that debt is about $100 million/month.
According to the memo, Moreira contends Petrobras' fiscal woes could be alleviated by deregulating petroleum product prices, negotiations with creditors, and reducing inventories and costs.
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