BRASILIA, March 20 (Reuters) - Brazil Finance minister

Fernando Haddad will ask President Luiz Inacio Lula da Silva to

give the go-ahead for state-run oil firm Petrobras to

release extra dividends to investors, two government sources

with knowledge of the matter told Reuters.

On March 7, Petrobras withheld extra dividends anticipated

by investors, who expected an additional payout of at least $3

billion on top of the normal dividends of about 14.2 billion

reais ($2.8 billion).

That sent Petrobras shares plunging over 10% the next day,

as Reuters reported that the decision to axe the payout came

from Lula, igniting fears of political interference at the firm.

The government hoped Petrobras would be able invest the

cash, two sources told Reuters, while Petrobras Chief Executive

Jean Paul Prates insisted the money be set aside in a fund that

would eventually be released to shareholders.

Haddad will argue the government would be the main

beneficiary of the release, since it is the main shareholder,

the sources said, and that the extra cash could be invested to

advance Lula's intention to boost the economy and generate local

jobs through public works.

The more likely outcome, however, is that the cash would be

used to balance the federal budget, said the two sources.

Lula holds Haddad in high regard. Since Lula took office in

2023, Haddad has navigated difficult political situations in

Congress while maintaining fiscal discipline despite friendly

fire from the leftist president's political base.

Last week, Haddad sided with the Petrobras CEO during a

meeting between both men, Energy Minister Alexandre Silveira and

Lula, held after the tumble in the firm's shares.

After the meeting Haddad gained power to appoint a board

member to Petrobras, and both Silveira and Haddad echoed Prates'

own statements that cash set aside from last year's profit would

eventually be used for shareholder dividends.

($1 = 5.0061 reais)