LatinNews Daily Report - 03 December 2012

OIL | Rousseff sanctions royalties bill, but with up to six vetoes. On 30 November President Dilma Rousseff sanctioned the controversial new framework legislation for the distribution of oil royalties between producer and non-producer states and municipalities. The final version, which will include up to half a dozen vetoes, will be published in the official gazette today (3 December). As expected, the president drew a red line through the section amending the distribution of royalties from existing oil concessions, on legal and constitutional grounds. The executive also presented a complementary legal measure, which will be sent down to congress, to assign 100% of the royalties from Brazil's new offshore oil sector to education, as per the government’s original proposal. Under this, all states and municipalities in the country, both producer and non-producer, would have to dedicate all future oil royalty earnings to education. In addition, 50% of the royalty earnings going into the new federal social fund will also be destined for education. Education Minister Aloizio Mercadante noted that states and municipalities would remain obliged to fulfil, separately, their constitutional obligation to invest at least 25% of their earnings in education. Mercadante stressed that this was the only way “to make viable” the new national education plan recently approved by congress, which lifted targeted education spending to 10% of GDP, above the executive-proposed target of 8.0% of GDP.

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