Oil royalties affect the performance of Rio’s municipalities, study reveals
The unassertive distribution of royalties of oil in cities in Rio de Janeiro has had a worrying impact on vital areas such as education, health and management. This is the assessment of Sergio Andrade, specialist in political science and leader of Agenda Pública.
Resource management: a long-term vision
According to Andrade, several cities in the state are allocating resources from oil and gas to short-range projects, without a long-term strategic vision. “Many municipalities are focusing on immediate return initiatives, without considering a broader perspective that aims to leverage sectors such as infrastructure, education and economic diversification”, he highlights.
Recently, Agenda Pública, an NGO that collaborates with municipalities and corporations in the development of public policies, revealed a study that included the 20 national municipalities with the highest revenues from oil and gas activities between 2022 and the first half of 2023. Of these, 19 are from Rio de Janeiro and one belongs to São Paulo (Ilhabela).
Royalties and the municipal economy
For Andrade, the royalties Oil and gas represent the main source of income for most of these cities. “In addition to direct revenue, there are also taxes, fees and contributions that arise from activities linked to this sector. These resources finance a large part of the services and infrastructure in these locations,” he says.
The expert highlights the need for companies in the segment to adopt compensatory strategies, aligned with nationally established socio-environmental standards. However, he emphasizes that more is needed. “There is a deficiency on the part of companies. To improve the performance of these municipalities, as detected in the study, it is essential to strengthen institutional capacities and develop long-term economic strategies aimed at a fair transition to a more sustainable economy”, he concludes.
Rankings and realities
The “Oil and Living Conditions” study segmented cities into three population categories and assessed the quality of public governance in each of them. For example, Duque de Caxias, in the category of cities with the largest population, had a worrying performance, with a negative highlight in education, but a good evaluation in quality management. In contrast, Niterói led this group positively.
In the intermediate group, Magé had the lowest score, with social protection as its most vulnerable area. Macaé, on the other hand, led this group. And in the last group, of cities with up to 100 thousand inhabitants, Paraty was in last position, despite having a good evaluation in economic development.
Large corporations, such as Petrobras, Equinor and Shell, are among the leaders in Brazilian pre-salt operations, playing a central role in the royalty scenario and in the economy of these municipalities.
Source: Sergio Andrade, specialist in political science and leader of Agenda Pública.
