Redistribution of Oil Royalty

President Dilma Roussef sanctioned the Oil Royalties Redistribution law this Friday (11/30). However, the President vetoed the section of the law that was approved in the Chamber of Deputies, which defined a greater share of royalties to non-producing states and municipalities in production fields already under exploration.

The President issued a Provisional Measure determining the transfer of all royalties from future contracts to the area of ​​education. Minister Aloisio Mercadante approved the President’s decision, understanding that this measure is of “great historical significance”. The President stated that only education will make Brazil an effectively developed nation.

The producing States and Municipalities agreed with the President’s decision, as for many days they had been in tough negotiations to maintain the agreements signed in the signatures of existing contracts. According to them, this decision of the security position respects the constitution and sets an example of respect for the laws. The governor of Rio de Janeiro stated that the veto is confirmation that the Democratic Rule of Law
is in force in Brazil.

Non-producing States and Municipalities represented by the National Confederation of Municipalities. In a statement, they regret the decision and claim that the veto will maintain the unjustified privilege of two states and 30 municipalities.

With the veto, the producing States and Municipalities will continue to receive a larger share of the amount paid by companies, which is 26.25% in the contracts in force. The new rules for future contracts came into effect as of 2013, when the producing states rose from 26.25% to 22% and the Municipality from 26.25% to 5%. The participation of non-producing states and municipalities should increase. Non-producing states rose from the current 1.75% to 24.13% and non-producing municipalities from the current 7% to 24.5% in 2013.

The President had until this Friday (30/11) to veto the section of the law. His veto was decided under strong pressure from the Governor of Rio de Janeiro. According to him, this law would strangle their public coffers and could compromise preparations for the 2014 World Cup.

The population has a great responsibility to supervise their Municipalities in the conscientious use of this resource, which is being destined for the improvement of our education, guaranteed by the Provisional Measure (MP) that our President will forward on Monday to the Senate.

Read too:

  1. Royalties what is it?
  2. Oil Royalties in Brazil

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