Government signs agreement with Congress to secure Transfer of Rights mega auction

September 26, 2019

The purpose of the agreement, tailored by Economy Minister Paulo Guedes, is to maintain the date of the auction in November, even if deputies want to change the proposal; government needs the resources to close this year’s accounts

An agreement between Economy Minister Paulo Guedes and the congressional summit closed last night will allow the government to hold the pre-salt mega auction scheduled for November, even if deputies return to change the sharing of resources between states and municipalities.

The rapporteur of the proposal in the Chamber’s Constitution and Justice Commission (CCJ), Deputy Áureo Ribeiro wants to increase the percentage of 15% that the Senate has set for transfers to municipalities. The change in the text could delay the processing of the Proposed Amendment to the Constitution (PEC), which was worrying the economic team.

There is a rush for approval because the government has until October 15 to send a bill that sets the budget forecast resources. The government needs the auction amount to close this year’s accounts.

Ribeiro stated that two possibilities are under negotiation: the suppression of the transfer to the states and the consequent allocation of 30% to the municipalities or a new division of the amount, being 10% for the states and 20% for the municipalities. The second option would force the text back to the Senate. States like São Paulo, however, protest against the idea.

The agreement not to delay the auctioning of the surplus of the so-called Transfer of Rights assignment was concluded on Wednesday between Guedes and the Presidents of Congress and Senate. By agreement, it will be promulgated only the part of the text in which there is consensus between deputies and senators, which includes the authorization for the auction and the payment of $ 33 billion of the debt of the Union with Petrobras.

Context

The Transfer of Rights assignment agreement was signed by Petrobras with the Union in 2010 and allowed the state to explore 5 billion barrels of oil in pre-salt fields in the Santos Basin without bidding. In return, the company paid R$ 74.8 billion. The government estimates, however, that the area can yield from 6 to 15 billion barrels and the Transfer of Rights Surplus auction , scheduled for November, may yield R$ 106.5 billion.

The Bill has already been voted by the deputies and approved by the Senate, but was modified,  so its again under consideration by the House  and Justice Committees. According to congressmen who were warned about the maneuver, anything that is not promulgated because there is no consensus, such as the division of resources with governors and mayors, will continue to be processed in the House.

What remains of the proposal will start from scratch, with the definition of a new rapporteur and new deadlines.

According to Deputy Finance Secretary Esteves Colnago, the government will not enter into the discussion of the division of resources. “We do not agree or disagree. We do not want the Bill to return to the Senate because we are in a hurry. ”

According to the text approved by the Senate and now under consideration by the House, the division of R$ 106.5 billion that can be collected with the Transfer of Rights auction, scheduled for November, will be like this: R$ 10.95 billion (15%) will be passed on to States, following the criteria of the State Participation Fund (PEF); another R$ 10.95 billion (15%) will be distributed to the municipalities, according to the criteria of the Municipal Participation Fund (FPM); R$ 2.19 billion (3%) will be for the state of Rio de Janeiro and R$ 48.9 billion to the Union.

“In the new model, I think the resources need to be better distributed to the municipalities that are the ones that touch people’s daily lives,” Ribeiro told Estadão / Broadcast.

Source: Estadão