Now, recent articles at the Economic Times and Brasil@gro just point out how Brazil’s “huge offshore oil wealth called a lottery jackpot” has its dark side. A few of Petrobras’ suppliers risk going broke before they can claim their prize. After all, it’s not all carnival…
Lupatech, Brazil’s biggest supplier of industrial valves and anchor cables, was counting on its place in a nascent oil services industry to guarantee a slice of the boom led by state-controlled oil company Petrobras and its $225 billion five-year investment program.
Instead, Lupatech (a public company) is struggling to stay solvent. Petrobras business has been slow to materialize, and a cold shoulder from credit markets chilled by a looming European debt crisis, has put it at the mercy of key shareholders to avoid default.
Petrobras has also been hamstrung by rules forcing it to pay a premium to buy from new and untested local suppliers… However, companies are finding the road there more treacherous than promised by the government.
(Lupatech’s fault, too!)
(Petrobras “motto”: over-promise, under-deliver… )
Our comment: Lupatech is only one story of how a company depending on the government can go broke … it’s in the media because Lupatech is the biggest supplier and a public company. There are several other suppliers that have issues with getting paid which is not reported… read here, for another example, to see that Autograf and its contributors have issues collecting money from Petrobras. Or the company Santa Barbara Engenharia with the same problems with VALE. After all, being a supplier to the “rich” Brazilian government is not that easy …