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Bill 1470/19 distributes royalties from oil and gas exploration to states and municipalities by the rules of state participation funds (FPE) and municipalities (FPM).
Oil, shale and natural gas exploration companies must compensate 8% of the value of the products, half for states and half for municipalities. Currently, the Petroleum Law (9.478/97) guarantees greater financial compensation to states and municipalities where extraction takes place. By law, compensation of up to 5% of production is divided as follows: 70% of royalties go to producing states; 20% for producing municipalities; and 10% for municipalities affected by oil and natural gas loading and unloading operations.
For what exceeds 8% of production, the proposal allocates resources in 37,5% to states and another 37,5% to municipalities and 25% to the Ministry of Science, Technology, Innovations and Communications (MCTIC). The Petroleum Law allocates what exceeds 5% of production into: 52,5% to producing states; 15% to producing municipalities; 7,5% to municipalities affected by embarkation/disembarkation operations; and 25% for the MCTIC. The same logic applies to the distribution of what is extracted in maritime fields, the resources go to all states and municipalities and not just to those producers or those affected by production.
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According to Deputy Sebastião Oliveira (PR-PE), the current laws on financial compensation for oil and gas exploration (Laws 7.990/89 and 9.478/97) did not promote fair distribution of resources. “They favor producing states and municipalities to the detriment of others, which is not justified, as hydrocarbons are the property of the Union,” he said.
The proposal is being processed in a conclusive manner and will be analyzed by the Mines and Energy commissions; Economic Development, Industry, Commerce and Services; Finance and Taxation; and Constitution and Justice and Citizenship.
Ministry releases issuance of bonds for oil and gas projects
The Minister of Mines and Energy, Bento Albuquerque, signed this Monday, June 17, an ordinance that releases fundraising through the issuance of debentures for oil, natural gas and biofuel projects. Bento Albuquerque announced the measure that regulates the classification of priority projects in the three sectors in São Paulo, during the Ethanol Summit 2019.
“Today we concluded an act of the federal government that perfectly translates what we intend to do to unlock the investments that the country so badly needs, generating jobs and income”, declared the minister.
In addition to the Minister of Mines and Energy, Bento Albuquerque, the opening of the event was attended by the Minister of Agriculture, Tereza Cristina, the Minister of Civil Affairs, Onyx Lorenzoni, the Governor of São Paulo, João Dória, the president of Apex-Brasil, Sergio Ricardo Segovia Barbosa, among other authorities.
“The expectation is that the measure will reinforce RenovaBio’s goals with the expansion of the number of biofuel plants and, consequently, increase the supply of ethanol, which may reduce the price of fuel to consumers,” said the MME, in a note, citing an investment of BRL 9 billion per year with the renovation of sugarcane fields and another BRL 4 billion with the increase in sugarcane production.
“With the entry into force of RenovaBio, investments will be even greater. We estimate that around BRL 60 billion a year will be needed in this sector, ”he said.
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