Huge Rio protest against oil royalties share-out plan

Tens of thousands of people took to the streets of Rio Monday to press Brazilian President Dilma Rousseff to veto a bill that would redistribute oil royalties in favor of non-oil producing states.

The rally dubbed "Veto Dilma! Against injustice. In defense of Rio" was held in a festive atmosphere. Police estimated that 200,000 people from various cities across Rio de Janeiro state participated.

Governor Sergio Cabral and Rio Mayor Eduardo Paes have both warned that the new oil royalties share-out plan will jeopardize the financing of the 2014 World Cup and the 2016 Summer Olympics.

Rousseff has until Friday to endorse or veto the measure, which has already been approved by both chambers of Brazil's congress.

The measure would cut from 30 to 20 percent the royalties collected by the federal government, and from 26 to 20 percent those of producing states.

Non-producing states in turn would see their oil royalty revenues rise from seven to 21 percent by 2013, and up to 27 percent by 2020.

"We cannot redistribute the royalties with other states," Isabel Johnson, a 24-year-old nurse, told AFP. "It is our heritage and our chance to climb on the international stage with the exploitation of the pre-salt," she added in reference to massive deep-water oil reserves discovered in 2007 off Rio de Janeiro state.

The pre-salt reserves could hold more than 100 billion barrels of high-quality recoverable crude and turn Brazil into one of the world's top exporters, according to the National Petroleum Agency.

The protest was called by Cabral and Paes who have said the legislation would deprive Rio state of $1.7 billion as early as next year, and of $24 billion by 2020.

Julio Bueno, the state secretary for economic development, was quoted as saying by the G1 news portal that "the consequences would be disastrous."

"There are cities (in Rio state) where the royalties represent 60 percent of revenues."

To encourage the public to join the protest, civil servants were given the afternoon off and public transportation was free.

And Cabral ordered a huge "Veto Dilma" banner to be placed across the city's iconic Sugarloaf Mountain.

Non-producing states have been pressing for an equitable distribution of oil royalties among the country's 26 states and the federal district of Brasilia, a move bitterly opposed by producing states.

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