During a meeting in Brasilia, governors for the 16 nonoil-producing states came “very close” to a deal, Pernambuco state Governor Eduardo Campos told the newspaper. Under the deal, the federal government would transfer about 4.5 billion Brazilian reais ($2.3 billion) from the government’s share of future royalties to nonproducing states. More important, royalties from existing oil production would remain with Rio, Espirito Santo and Sao Paulo states.
The deal would reverse changes implemented last week when Brazil’s Congress voted to overturn a presidential veto of key portions of new oil-royalties legislation, equally distributing royalties from existing and future oil production between the country’s 27 states. Rio, Espirito Santo and Sao Paulo, however, plan to fight the changes by filing lawsuits with Brazil’s Supreme Court.
Nonproducing states are concerned the three states will win their cases, overturning the new legislation and leaving the 24 nonproducing states with no piece of the pie, Mr. Campos told O Globo. The proposal will be presented to President Dilma Rousseff at a meeting next week, the governor said.
It normally takes a lot to rattle a Carioca, as the famously chilled people of Brazil’s second-biggest city, Rio de Janeiro, are known.
But this week, the governor of the state of Rio de Janeiro, Sérgio Cabral, was making a good show of looking concerned after the federal Congress passed a law setting out new ways to divide royalties from oilfields among the country’s states.
The new law, which will redirect a greater share of government royalties from existing and new oilfields discovered off the coast of Rio to the rest of Brazil’s states and municipalities, would leave his state unable to stage the World Cup in 2014 and the Olympics two years later, Mr Cabral said.
Raymond Colitt and Brian Ellsworth – Reuters, 10/03/2011
Brazil‘s government is racing to forge a deal in Congress this week that it hopes will prevent a lengthy legal and political battle over its huge offshore oil reserves.
Brazil’s states and cities have been quarrelling for years over how to distribute the expected multi-trillion-dollar windfall from one of the world’s biggest recent oil finds. Former President Luiz Inacio Lula da Silva called the so-called “subsalt” fields, discovered in 2007, “a gift from God” that could make Brazil a rich country.
President Dilma Rousseff’s government is now trying to defuse the arguments by offering a cut of its own take in future royalties from the fields. Officials are confident Congress will approve the government proposal in coming days or weeks.