Rio Olympics organization threatened by new law

Rio de Janeiro state governor Sergio Cabral warned on Wednesday that the state's capacity to organize the 2016 Olympics Games and some matches of the 2014 World Cup are in jeopardy because of a new oil royalties bill. The bill, approved by the House of Representatives on late Tuesday, determines a reorganization of the division of oil fields. With the change, the producer states and municipalities will receive a lower share of the oil royalties, starting in 2013. In addition, the bill applies the new division to oil fields which have already been conceded and already in production. As the larger oil producer in Brazil, Rio vehemently opposed the bill, along with other producer states. As the new division applies to royalties the state already receives, there will be major losses to the collection; according to Governor Cabral, those losses will bankrupt the state, as the royalties are part of the budget and are being used to honor many of the state's financial responsibilities. "The bill will cause the state's accounts to collapse. It is absolutely unviable. The state will shutdown, it will not make the Olympics or the World Cup. It will not pay the public servants, the retired, the pension beneficiaries," he said. Cabral is confident that President Dilma Rousseff will veto the bill. He said the bill is illegal for two reasons: because it annuls previous contracts and because it goes against article 20 of the Constitution, which foresees compensations to the state from where the oil is extracted. Renato Casagrande, governor of Espirito Santo, another producer state located beside Rio, also disapproved of the bill and said his state will take the case to the Supreme Court to defend their rights. Some Rio representatives told local press they might do the same.