The chief executive of Brazilian biodiesel company BSBios said on Friday he plans to buy out state-run oil company Petroleo Brasileiro SA’s (PETR4.SA) 50 percent stake in the firm, citing the sector’s improved prospects amid regulatory changes.
CEO Erasmo Battistella, whose company R.P.Bio holds the remaining 50 percent in BSBios, told Reuters he will exercise his preferential right, foreseen in a shareholders’ agreement, to buy out the stake that Petrobras put up for sale last year.
Battistella was upbeat on growth prospects of the Brazilian biodiesel market after the government this week increased the amount of that fuel that must be blended into diesel to 10 percent from 8 percent. The change was implemented one year ahead of schedule, he said.
“The new rules will reduce the sector’s idle capacity, though there are still plants closed in Brazil as (biodiesel) sales have lagged,” Battistella said in an interview.
Petrobras announced the decision to sell its half of the biodiesel joint venture in December, part of the company’s sweeping divestment plan aimed at reducing its debt and focusing on core activities like oil production.
Petrobras referred to past disclosures on the stake sale but declined to comment on Battistella’s plans to bid.
Battistella declined to reveal how much he would be prepared to pay for the stake in BSBios, which currently has capacity to produce 576 million liters of biodiesel per year.
The executive said he has to wait for Petrobras to conclude the process of seeking competing bids before he can unveil his own.
Biodiesel, derived mainly from soy, can substitute partially or totally for diesel fuel and is used to power trucks and agricultural machines, the executive said.
Brazil’s domestic biodiesel consumption is expected to rise by 26 percent in 2018, to 5.4 billion liters, after the government changed regulations, he added.
Battistella, who is also head of Brazil’s biodiesel producers association Aprobio, said the group is lobbying to convince the government to boost the biodiesel mix to 15 percent in five years.
For now, the sector is still recovering from excess installed capacity of about 20 percent, he said.
“The government took too long to raise the mix. But now the prospects are better.”
Source: Reuters.com