Thursday, March 07, 2013 5:53 pm
Brazil congress overturns veto of oil revenue law
The Associated Press
The new law divides oil royalties, from existing and future drilling and production concessions, more evenly between all of Brazil's 27 states instead of favoring top oil producers like Rio de Janeiro, Espirito Santo and Sao Paulo states.
Congress approved the law late last year but President Dilma Rousseff vetoed the part that decreased the percentage of petroleum royalties going to producing states from 26.25 percent to 20 percent. Non-producing states that now receive 7 percent are to see their share increase to 21 percent.
The central government sees its share of royalties drop from 30 percent to 20 percent. The rest of money goes to municipal governments in producing states
Officials in Rio de Janeiro, the largest producing state, have said the law will deprive Rio of $1.7 billion in 2013 alone, endangering preparations for the 2014 World Cup and the 2016 Olympics.
State Gov. Sergio Cabral told reporters the law would "bankrupt" the state and many of its municipal governments, 87 percent of which depend on oil-generated revenues.
He said the state government plans to file an appeal with the Supreme Court arguing that the legislation "is unconstitutional because it breaches existing production contracts."
Renato Casagrande, governor of Espirito Santo state, told the Globo TV network that the law is a "hard blow against the finances of our state and of Rio de Janeiro that account for nearly all of Brazil's oil production."
Because of the law, Espirito Santo state stands to lose more than 10 billion reals ($5 billion) over the next seven years.
Casagrande said his state would also file an appeal with the Supreme Court, taking the same position as Rio state.