Court Allows Petrobras to Continue Simplified Bidding System

Brazil's supreme court has ruled that federal energy company Petrobras (NYSE: PBR) can continue to buy goods and equipment through a simplified bidding system, the court said in a statement.

The decision overturns a ruling from the federal audit court TCU that said Petrobras should hold full-blown tenders to buy equipment because it is government controlled.

The supreme court issued a preliminary injunction Friday (Mar 24) declaring the TCU ruling unconstitutional.

Since 1998, when a constitutional amendment opened up the oil industry to the private sector, Petrobras has had to compete with private companies that do not have to hold the more complex bidding processes.

DISAGREEMENTS

Petrobras is also questioning a preliminary TCU ruling that a 265mn-real (US$122mn) contract it awarded local engineering company GDK to refurbish the P-34 floating production, storage and offloading vessel was overpriced.

P-34 is due to start oil production at the offshore Jubarte field in the Campos basin this year. The vessel is moored at Vitoria port in Espirito Santo state.

Suspicions of political influence in the hiring of GDK arose last year when a member of the ruling Workers Party admitted having received a 70,000-real Land Rover as a gift from a GDK executive.

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