The STF will vote in April on the Oil Royalties Law that threatens Niterói's budget; the new law is approved, the municipality will lose about R$ 1 billion

If the Oil Royalties Law is approved by the Federal Supreme Court (STF) in April, Niterói's budget will fall from R$ 3,61 billion to R$ 2,65 billion this year - a value 26% lower and which represents an amount of R$ $951 million. Rio collapses if the law that changes the distribution of oil royalties is approved in November

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With the current rules, the National Petroleum Agency (ANP) predicts that Niterói will collect R$ 1,48 billion this year for oil exploration, but if the STF change the distribution, the value will drop to R$ 535 million.

Faced with the possible drop in revenue, the Public Ministry of the State of Rio (MPRJ), through the Collective Guardianship Office for the Defense of Citizenship in Niterói, issued a letter to the Executive asking for information on the structure of internal control and planning, budget and management , in addition to the measures being taken to support possible shortages.

The measure was taken after a technical report from the body, informing that Niterói would have lost about R$ 942 million in royalties and special participations if the law were already in effect. Of the R$ 1,37 billion collected with the oil, the city would have been left with only R$ 436 million.

Since 2016, Niterói has seen its revenue from oil soar, in that year, the city itself raised about BRL 316,7 million — four times less than the BRL 1,37 billion in 2019.

The Royalties Law — enacted in 2012 by Congress, but subsequently suspended by the STF after an action presented by the government of Rio — provides for a reduction from 26,5% to 4% in the distribution of financial resources from royalties, and from 10% to 4 % in relation to special participations (financial compensation granted when there is a large volume of production) to producing municipalities, which is the case of Niterói. These resources would be distributed to all states and municipalities, and not just to producers.

According to the Treasury Department, despite affecting Niterói's revenue, the possible change will not cause uncontrolled accounts and that, if the change materializes, the municipality will receive an amount proportional to that of 2016, the year in which it was in first place in the state of Rio in the Firjan Tax Management Index.

— An eventual change will have an impact because the revenue flow is very high, but we have fiscal control mechanisms that would not allow the lack of control of accounts, such as the Revenue Equalization Fund (FER), and the fiscal surplus. Eventually, we would need to change the investment planning - says secretary Giovanna Victor.

In March 2019, the city hall created the FER, a savings account that will receive, for 20 years, 10% of the resources transferred quarterly referring to special oil participations. Today, the fund has R$ 245,4 million.