(Bloomberg) -- Petroleo Brasileiro SA’s board settled on a 50% payout of its potential extraordinary dividends from 2023, settling a dispute that rocked the Brazilian market over concerns that President Luiz Inacio Lula da Silva was exercising too much influence over the state-controlled oil producer.

The agreement will deliver almost 22 billion reais ($4.23 billion) to shareholders, including the government. That’s half of the almost 44 billion reais the company had available to distribute. While Lula wanted to keep all the funds to reinvest in Petrobras’s operations, the board agreed on a compromise under pressure from investors who wanted a full payout.

Shareholders must approve the measure in a meeting on April 25, the oil giant said in a regulatory filing late Friday.

The proposal will be formally presented by the government directly in the shareholders meeting, according to people close to the matter. 

The board will analyze during the year whether to pay out the other 50% later, the majority of the board decided after concluding that the payouts “would not compromise the financial sustainability of the company,” Petrobras said. 

Lula had been pressing Petrobras to limit shareholder returns in favor of reinvesting in the company, and at various points over the past several weeks the oil producer’s chief executive officer, Jean Paul Prates, was on the brink of losing his job. But investors responded to the dividend decision by selling off Petrobras shares, and Lula’s economic team sought to moderate his approach. 

On Friday, Prates told O Estado de S. Paulo newspaper that the board’s decision in favor of the 50% payout was almost unanimous, with just one vote against the proposal, from the employees’ representative. That means the measure is likely to pass in the shareholder meeting since it has government support. 

The decision may boost the government budget by about 6 billion reais, O Globo newspaper reported, which represents a win for Finance Minister Fernando Haddad, who worked on the proposal. The distribution of dividends is important for the minister, who plans to use the funds to reinforce the government’s cash flow and pursue his fiscal targets, the people said. 

Over the past year in the role, Prates has been struggling to manage competing expectations from investors and Lula, who sees the oil company as a catalyst to boost jobs and Brazil’s industry.

(Updates throughout the article.)

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