Brazilians protest against changes in oil royalties regulations

Tens of thousands of people gathered in downtown Rio de Janeiro on Thursday to protest against a bill that changes the division of Brazil's oil royalties and could deprive the Rio state of 29 billion U.S. dollars in revenues. Some 150,000 people marched against what they considered an injustice to their state, waving Rio flags and protest banners, the police said. The protestors walked on the Rio Branco Avenue and reached the Cinelandia square, a traditional site for political protests in the city. The demonstration, organized by the government of Rio state, gathered intellectuals, celebrities and politicians from several parties, including state Governor Sergio Cabral and mayor Eduardo Paes. Cabral described the bill as a "legal aberration" and stressed his unwillingness to accept the changes. "Rio is a democratic state," he said, adding that the new bill would violate the right of Rio's citizens to their "guaranteed resources." Rio de Janeiro is one of the largest oil producers in Brazil, thanks mainly to the Santos and Campos Basins, which are located off the state's shore and have large reserves of oil in both shallow and deep waters. As a producer state, Rio receives a larger share of the royalties from the oil extracted from its territory. Compared with other locations, municipalities where the oil is extracted also receive a larger share of royalties. In October, the Senate approved a bill that intends to change that division. Brazil's House of Representatives will also vote on the bill, which stipulates that oil royalties should be shared equally by all states and municipalities. The new division would lead to a massive loss of revenues for Rio and other producer states, as well as for several municipalities for which oil exploration is the largest source of income. Each producer state and municipality currently brings in 26.25 percent of oil royalties. But with the new regulations, they would receive 20 percent and 4 percent respectively. Defenders of the bill claim that a larger royalties share for producer states and municipalities goes against the Brazilian Constitution, which states that oil and other natural resources are the common property of the country. Those who oppose the bill, on the other hand, claim that the bill itself contradicts the Constitution. According to them, though the Brazilian law states that oil reserves belong to the whole country, it also states that producer states and municipalities must receive special compensation for the exploration of their resources. If the bill is approved by the House, it will require the approval of President Dilma Rousseff and a positive evaluation of legality from the Supreme Federal Court. Rio politicians hope that Rousseff, who won by a landslide in Rio, will veto the bill.