Truck drivers' strike continues to hit Brazil

Truck drivers' strike continues to hit Brazil

Brazil's government struck a deal with truck drivers on Thursday (May 24) to suspend a four-day protest that crippled swathes of Latin America's largest economy, promising changes to diesel pricing that could leave it footing a 5 billion reais (S$1.8 billion) bill this year.

Hours later, the Brazilian Association of Truckers, one of the largest unions that had walked away from talks with the government on Thursday, called on its members to remove their trucks from roadways but "continue to protest peacefully".

"I'd like to unveil an immediate security plan to mobilize federal security forces to unblock the roads, and I'm requesting state governors to follow suit".

More than fifteen city and inter-city bus companies are being affected.

The shutdown comes at a time when Brazil is struggling to recover from a deep recession and many people are furious at much of the political class because of a massive corruption scandal that involved inflated construction contracts and billions of dollars in kickbacks.

State-run oil company Petroleo Brasileiro SA on Wednesday announced a temporary 10% diesel price cut at the refinery but the head of a truckers group said that step was insufficient.

The truckers pressed on with the strike Friday, despite a deal between the government and unions late Thursday to suspend the protest for 15 days.

Luiz Antonio, a trucker who was striking outside of Rio de Janeiro on Friday, said he didn't trust what had been negotiated in Brasilia.

Petrobras shares plunged 14 per cent earlier in the day after the firm initially slashed diesel prices, raising investor concerns of a return to government interference in the company that saw it run up huge losses and debts under ex-President Dilma Rousseff.

Auto production in Brazil, which contributes about a quarter of industrial output, ground to a halt on Friday in the latest blow to a fragile economic recovery following the worst downturn in decades.

On Wednesday, a judge in Brasilia authorised the police to use force to clear six of the country's main roads.

"We are not going to permit that the population does not have access to essential goods. that hospitals do not have the necessary medicines to save lives".

"Those blocking the road in radical fashion will be held accountable for it".

For many drivers, however, those moves did not seem to be enough, and it was not clear if they might eventually agree to the terms.

Petrobras adopted then a pro-market policy of tracking global oil prices. Citing unnamed sources, Reuters said investors were anxious that if Petrobras changes its pricing strategy, it might lead to unfair competition at the expense of smaller private fuel retailers-bad news for refinery owners.

In the first agreement, the price had been reduced by 0.23 reais.

But the determination of the truckers has caught center-right President Michel Temer's government flat-footed, five months ahead of presidential elections.