Oil royalties create islands of wealth in 17 cities



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The federal government's pledge to share some of the Union's resources in the pre-salt between states and municipalities is an encouragement to hundreds of mayors and governors who see the federative pact as an opportunity to better balance their often weakened public accounts. A select group of managers, however, has nothing to complain about when it comes to collecting royalties and special holdings on oil and gas.

Survey of Value, based on the database of the InfoRoyalties website, maintained by the Cândido Mendes University (UCAM), shows that in 2018, for the first time in history, the oil revenues of Brazilian municipalities exceeded R $ 10 billion, while in the states the contributions hit the record of R $ 15 billion.

The bonanza cycle, however, is not a reality among many federative entities. Rio and São Paulo accounted for 85% of royalties and special participation among states and were the only ones to record a record oil revenues in 2018, while Espírito Santo and Northeast are living with the decline of their fields. Among the municipalities, two-thirds of the revenues go to the coffers of 20 cities. To illustrate the size of the concentration of oil money, 17 raised more than $ 100 million, while 501 cities received less than $ 1 million in 2018.

The criteria for passing on royalties have been stalled since 2012, when Congress passed Law 12.734 / 12, which changed the rules of redistribution and reduced transfers to the producing states in favor of other federal units. The matter went to the Federal Supreme Court (STF), which in 2013, through an injunction, suspended the effects of the law. The issue never went to plenary, and the National Confederation of Municipalities (CNM), favorable to the new criteria, takes a position from the Court.

The main beneficiaries of royalties are located today in Rio de Janeiro, whose coastline is confronted with the main pre-salt fields of the Santos Basin and the post-salt of the Campos Basin (the two largest production frontiers on the Brazilian coast ). The understanding among the authorities of Rio de Janeiro is that royalty, by definition, is a financial compensation to the states and municipalities that harbor the extraction activities and that suffer their direct impacts.

Amid record production of the pre-salt, Rio's municipalities are moving to exceed, in 2020, the level of collection of R $ 10 billion in royalties and special participations, according to Firjan projections. Among the 92 municipalities in the State, a select group emerges as the main destination of these figures in the coming years.

Between the imposing Costão de Itacoatiara, in Niterói, to the paradisiac Pontal do Atalaia, in Arraial do Cabo, a coastal strip stretches for about a hundred kilometers of beaches, intersecting five municipalities: Niterói, Maricá, Saquarema, Araruama and Arraial do Cabo, who receive R $ 1 in every R $ 4 of all that the Brazilian municipalities collect with royalties and special participations.

These five cities, which together hold 915,000 inhabitants, have raised about R $ 3 billion in royalties and special participations in 2018 and have a promising future ahead, since all nine platforms that Petrobras expects to start operating in the coming years. five years, in the pre-salt, will be installed in the coast of these municipalities. The oil company estimates that the pre-salt will generate revenues in the order of R $ 150 billion by 2023, for the Union, states and municipalities in government participation.

In 2018, the region witnessed the emergence of billion-dollar oil cities in its territory – municipalities whose revenues from oil revenues exceeded a billion reais. These were the cases of Maricá and Niterói, in the metropolitan region of Rio. Until then, only Campos dos Goytacazes, in the North of the State of Rio de Janeiro, had achieved the feat at the beginning of the decade.

The bonanza that generates so much optimism among managers also worries. In Maricá, for example, in the state of Rio de Janeiro (LOPP / MPRJ), surveys of the Laboratory for Analysis of Budgets and Public Policies, warn of the degree of dependence of municipalities on oil revenues in Rio. oil revenues already account for 70% of the budget, while in Niterói this percentage jumped from 6% in 2015 to 31% in 2019.

"The whole history of the Northern Fluminense shows that these municipalities [como Campos dos Goytacazes e Quissamã] received a lot of money, became very dependent on oil revenues, and did not show significant improvements in their development, "says Joana Monteiro, LOPP / MPRJ research center coordinator.

It questions the current distribution rules, which concentrate resources in a few municipalities. "The royalty rule means that there are very rich municipalities alongside very poor ones," he said, citing the example of São Gonçalo, a neighbor of the Maricá and Niteroi billionaires, whose revenues from oil are about R $ 20 millions.

Joana also emphasizes the importance of increasing the levels of control over the municipalities' expenses. "The municipalities receive a lot of money, we are talking about small municipalities with very large volumes. [de administrar]… It is very difficult for the local economy to do this [absorver tantas receitas variáveis]"he says.

The economist of the LOPP, Rodrigo Serra, advocates the creation of a collection roof system for municipalities, as a way of balancing distribution. "Once we reached a certain limit, the distribution would begin to be made spatially to other municipalities. There could be a meritorious system of compensation," he said.

In 2018, the LOPP published a study that warns of a 55% increase in Marica's staff costs between 2013-2017, "indicating a reckless procedure to raise substantially current expenses to cover personnel expenses, based on the inflow of an erratic, variable and finite income, such as those derived from oil financial compensation. "

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