The future of state-run oil company Petrobras’s refinery sales is in doubt after the Brazilian government moved to replace Chief Executive Roberto Castello Branco, three people close to the bidders said on Friday. The potential for a mass resignation of the company’s management raises questions about whether momentum toward asset sales strongly pushed by Castello Branco will be maintained under his replacement, two of the people said. The three sources spoke on condition of anonymity. A possible new management with a more nationalistic profile, led by former Defense Minister Joaquim Silva e Luna, could suspend the divestment process, the sources said. No decision has been made by Petrobras or bidders as it is too soon to evaluate the scenario, they added. Bidders who were preparing firm offers are expected to pause before deciding whether to proceed, they said. More advanced negotiations, including for RLAM and REFAP refineries, could eventually move ahead if bidders have legal security and political support for the privatizations remains, two of the people said. Petrobras said earlier this month it had agreed to sell RLAM to Abu Dhabi’s Mubadala Capital for $1.65 billion. Brazilian group Ultrapar Participacoes SA is leading talks to buy REFAP, based in the southern Brazilian state of Rio Grande do Sul. The uncertainties could also impact the valuation of the plants, with increased political risk included in the costs, one of the sources said. Brazilian President Jair Bolsonaro moved to replace Castello Branco after weeks of tension over fuel price hikes. “It’s certainly a good argument for a lower price,” said a fourth source close to a bidder for Petrobras’ REGAP refinery in the southeastern state of Minas Gerais. “I hope Bolsonaro has a plan to restore credibility.” The populist Brazilian president’s reluctance to tolerate price increases in line with market swings could also dampen potential bidders’ enthusiasm, said Edmar Almeida, a professor specializing in energy at the Federal University of Rio de Janeiro. “It’s become very clear to the market that the Brazilian government and even society isn’t prepared to allow a company with freedom to set prices at the most critical moments,” Almeida said. “This uncertainty will certainly make it harder to sell the refineries,” Almeida added. “Whoever buys is going to want freedom to set prices, otherwise the business won’t be sustainable.” Petrobras has been raising fuel prices since a Feb. 5 Reuters report that disclosed details of the company’s price policy, which led analysts to downgrade the company’s shares on concerns of possible political interference. Investors have been jittery about possible political interference since the oil producer confirmed Petrobras would allow domestic prices to differ from international prices for longer periods of time than previously disclosed. Reuters reported on Feb. 5 that Petrobras was calculating the international price parity of the fuels it sells over a period of one year. It was the first time the period used internally by Petrobras to close the books on price fluctuations had been made public since 2019, when the calculation was done monthly.