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Extension of Repetro should include benefits to the local industrial sector

BY MANOEL VENTURA /Globo

The Repetro program suspends the collection of federal taxes on the importation of equipment destined to the petroleum sector. Under the new rules, similar domestic products will undergo the same tax treatment. The provisional measure is being finalized by the federal government, according to sources accompanying the lawsuit.

Created in 1999, Repetro expires in 2019 and should be extended for another 20 years. The debate over the renewal of the program now occurs because the country is on the eve of three oil exploration auctions scheduled for September and October this year.

The oil industry claims that by dealing with long-term projects, it needs predictability to run its investments and says it can either abandon bids or incorporate the costs of uncertainty into the continuity of the bids. Therefore, even if Repetro expires in two years, the government should extend it in 2017.

The national industry, on the other hand, claims that the program encourages imports to the detriment of the local manufacturers, who do not get total exemption on the equipment made in Brazil, since they pay taxes on national and imported components. Therefore, according to sources accompanying the negotiations, it was agreed that the new Repetro will include the extension of benefits for domestic manufacturers.

With the novelty, national products should be treated more similar to imported equipment. That is, the benefits granted in the importation of the machines directed to the production of petroleum must also be offered to the national industry.

For the benefit to be extended, it is necessary to amend the law in force. For this reason, a provisional measure should be published, not just a decree extending the Repetro, as currently provided for in the legislation.

– If you cannot count with the Repetro, forget the auction. The government is in need of tax revenues, but the extension of the program will encourage the auctions, and it was a way found to soften the discourse of the equipment industry – explained a member of the government.

Without this program, it is estimated that taxes represent between 45% and 65% of the total investments of the enterprises, according to calculations of the Brazilian Institute of Petroleum, Gas and Biofuels (IBP). The projects could get more expensive, and the auctions, with lower bids.

In addition to Repetro, the machinery industry is calling for a possible change in old oil contracts to allow local content rules to be relaxed in agreements signed before the new rules are approved.

In February, the government cut by about 50% the demand for local content from the largest oil fields to be auctioned as of this year. The base industry has already threatened to appeal to the court if the National Petroleum Agency (ANP) authorizes changes to the old contracts. The possibility of an option for the oil companies will be discussed in public consultation.

The government expects to raise at least $ 9 billion this year with auctions for oil exploration only in grants, at the time of signing the contracts. The second and third auction rounds of pre-salt areas are scheduled for October 27; and the 14th round of block bids for exploration and production of oil and natural gas, on September 27.

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