On November 30, the federal government announced a decision on the bill amending the rules governing the distribution of oil royalties. The President of the Republic, Dilma Rousseff, opted to fully associate (through municipalities, states and the federal government) the royalty funds from future concessions to education as of next year. It was also decided that 50% of the revenue from the Pre-salt Social Fund will go to education.

The president vetoed Article 3 of the bill which provided for a reduced share of royalties and special participation arising from existing contracts in oil-producing states and municipalities. With the veto, the distribution of funds to states and municipalities currently producing in fields under exploration will be maintained.

In the case of fields to be established in the future, the measures set out in the bill passed by Congress will apply. Accordingly, revenues for producing states will be reduced from 26.25% to 20% in 2013. In the case of municipalities, revenues will fall from 26.25% to 15%. As of the enactment of the new law, states and municipalities that do not participate in oil operations will be entitled to a portion of the revenues.

The royalties are taxes paid to the federal government by oil companies as a form of compensation for possible environmental damage caused by extraction. Special participation is remediation for exploration in large extraction fields, such as the pre-salt layer.

05 December 2012