(Bloomberg) -- Petrobras announced another blockbuster dividend payment, rewarding shareholders at a moment of growing concern that Luiz Inacio Lula da Silva’s return to power in Brazil will bring the bonanza to a halt.

The state-run oil company’s board approved dividends of 3.3489 reais per share, totaling 43.7 billion reais ($8.5 billion), according to a regulatory filing Thursday. It also reported 46.1 billion reais in net income for the third quarter, down from the previous quarter but higher than a year ago, it said in a separate filing.

Politicians from Washington to London have been lashing out at oil companies for funneling windfall profits to investors while consumers suffer from higher energy prices. In Brazil, Rio de Janeiro-based Petrobras has come under attack from across the political spectrum for failing to contain fuel price inflation. Lula has vowed to invest more in domestic refining to avoid relying on imported fuel, and have the company focus more on national development.

Read more: Big Oil Lambasted for Handing Record Profits to Investors 

While the dividends represent a slowdown from the colossal $17 billion payout in the previous quarter, it means the total for 2022 stands at around 180 billion reais, well above last year’s record dividends of 101.4 billion reais. 

“It’s almost impossible for Petrobras to sustain payouts to holders at these levels,” said Leonardo Rufino, a portfolio manager at Mantaro Capital in Rio de Janeiro. “Now the focus will shift to Lula’s nominations and, if a reasonable name is chosen, we could start ruling out the worst case.”

Shares have plunged 8% so far this week after Lula’s narrow victory on Oct. 30.

Brazil’s main oil union, known as FUP, and an association of oil workers who are also shareholders, Anapetro, pledged to contest the massive dividends in court even before it was announced. They argue that dividends are much bigger than investments by the state-controlled company, and that they undermine its long-term plans. Petrobras has invested $7 billion so far this year, it said.  

“The bloodshed has returned to Petrobras,” Gleisi Hoffmann, a prominent lawmaker and the president of Lula’s Workers’s Party, said earlier on Thursday. “We don’t agree with this policy that takes away the company’s capacity to invest and only enriches shareholders.”

The dividends are compatible with the company’s financial sustainability in the short, medium and long terms and in line with the commitment to create value for society and shareholders, Petrobras said in a statement. Sales remained in line with the second quarter despite lower oil prices, which were compensated by higher demand for refined products in Brazil. 

 

Petroleo Brasileiro SA, as it is formally known, was at the center of Brazil’s presidential elections this year. Its robust profits and payouts were slammed by both Lula and President Jair Bolsonaro during the campaign. 

According to JPMorgan Chase & Co., which downgraded Petrobras shares to neutral from overweight following Bolsonaro’s defeat, the change in power brings uncertainties, including what will happen with the existing dividend policy. 

“The dividend bonanza could be starting to peak if we assume the new administration will focus on building new refining capacity,” said Fernando Valle, an analyst at Bloomberg Intelligence, adding that the next government could take steps to curb fuel inflation.

(Updates with details from earnings report)

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