Report on the pre salt legal framework favors more equitable distribution of oil royalties among states and municipalities.

The opinion of Deputy Henrique Eduardo Alves (PMDB-RN), presented on Tuesday (27th), is favorable to the proposal of the government which adopts the sharing regime for the exploration of oil in the pre salt layer (PL 5938/09).

The rapporteur, however, presented eight amendments to the government’s proposal. The most controversial one elevates from 10 to 15% the tax rate of the royalties paid by oil exploration. In the case of approval in the continental platform, 18% of the resources will be allocated to the producer states and 6% to the producer municipalities. The opinion of the rapporteur increases from 7.5% to 44% the funds that will be allocated to all the states and municipalities of the country.

Ten times more resources
Alves explained that, in the current model (with the tax rate of 10%), 40% of the funds of the royalties are allocated to the Union, 22.5% to the producer states and only 7.5% to a special fund which redistributes the funds to states and municipalities.

In the model proposed in its amendment (already with the tax rate of 15%), the index directed to the Union falls to 30%, and 44% are distributed to all states and municipalities of the country. To Henrique Eduardo Alves, the new model makes a fairest distribution without prejudicing the producer states and municipalities.

Alves assesses that, with such change, the resources which the states and municipalities receive from the royalties for oil exploration should be increased by the participation of the states (FPE) and municipalities (FPM).

“The states (producers) had 22.5% of 10% of the royalties. I am reducing to 18%, but I am elevating the tax rate for 15%, thus, there is a compensation. Besides that, I am not moving in already bid areas of the pre salt, where everything is going to remain the same way, in the concession regime - what is, therefore, a gain for these producer states. Only from now on do I make a fairer distribution, more egalitarian among all Brazilian municipalities and states, because oil is a good of all Brazilian people”.

Another innovation in the report of Henrique Eduardo Alves is the allocation of 3% of the royalties for the environment. The resources shall constitute a special fund for the development of programs for the mitigation and adaptation to climate changes.

The so called “signature bonus”, which is the value paid by the bidding winner concessionaire of exploratory oil fields, will have the following destination: 90% of the funds for the Union and 10% for states and municipalities.

The report maintains Petrobras as a unique operator in all the area of influence of pre salt, as the original project provided. “This is strategically important so that Petrobras may improve and acquire new technology to each field to be explored.”

Despite some controversial points, especially regarding royalties, the rapporteur is optimist as to the approval of the report. There was a request of collective view and the issue shall only be voted next week.

Reporting – José Carlos Oliveira/The Chamber's Radio Station
Edition – Patricia Roedel
Translation - Grupo Solucion-SP Language/Thiago Capatti