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Industry criticizes incentive plan for oil sector manufacturers

 

The Minister of Mines and Energy, Fernando Coelho Filho, told the Folha newspaper that the government will “soften” the local content rules in the oil sector and should extend the tax exemption program for the purchase of petroleum equipment, called Repetro, for more 20 years.

According to him, the measures, which are due to be launched in December, are aimed at making the oil and gas sector more competitive.

The renewal of Repetro, a special program for the taxation of exports and imports of goods destined for oil and natural gas exploration that expires in 2019, is endorsed by oil sector companies.

According to the companies, its extinction would represent a loss of competitiveness and a reduction of investments in the sector.

Fernando Coelho also informed that the government should include, in the calculation of local content, investments made in factories.

“We are going to reduce requirements and increase items that can be computed as local content, in a mix that will create something more realistic, a process that helps the industry, and not harm the industry.”

This week, the government released the draft with the new rules for the 2017 auctions, but it did not please either oil companies or machinery and equipment manufacturers. The document will be in public consultation until the 18th, during which time interested parties can submit proposals for improvement.

Abimaq’s chief executive, José Velloso, said the proposal represents “the end” of local content.

He criticizes the concept of “global local content”, which extinguishes the spreadsheet of goods that need to have nationalization index and creates a percentage for the entire investment. “Now even lawyers will turn into local content.”

The entity will propose that the percentage be divided by large groups of equipment. Abimaq also supports the expansion of the fiscal incentives program for oil equipment.

“In the last ten years, the government and Petrobras have gone abroad to attract companies to Brazil. They have invested US $ 60 billion in investments in productive capacity and now we see this wooden horse in the rules,” he says.

For the Brazilian Petroleum Institute (IBP), which represents the oil companies, the proposal simplifies the rules, but still does not completely resolve the issue of fines for non-compliance with obligations, one of the main flags of the segment.

The document deals only with rules for the 2017 auctions. For the marginal field auction, it eliminates the obligation to buy in the country. For the pre-salt, it determines mandatory percentages similar to the areas adjacent to the reserves, granted in previous tenders.

In most cases, they are lower percentages than the first pre-salt auction, which stipulated minimum local content of 55%. They now range between 30 and 65%.

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