Brazil's new oil revenue law goes into effect
SAO PAULO (AP) -- A new oil law that gives a greater share of royalty revenues from Brazil's vast oil fields to non-producing states went into effect on Friday and producing states say they will file appeals with the Supreme Court.
The law was published in the official gazette after President Dilma Rousseff signed it on Thursday.
The new law shares oil royalties, from existing and future drilling and production concessions, more evenly among all of Brazil's 27 states instead of favoring top oil producers such as Rio de Janeiro, Espirito Santo and Sao Paulo states.
Officials in Rio de Janeiro, the largest producing state, have said the law will deprive Rio of $1.7 billion in 2013 alone, endangering preparations for the 2014 World Cup and the 2016 Olympics.
Rio state Gov. Sergio Cabral the law would bankrupt the state and many of its municipal governments, 87 percent of which depend on oil-generated revenues.
He said the legislation is unconstitutional because it breaches existing production contracts.
The Espirito Santo governor, Renato Casagrande, has said his state stands to lose more than 10 billion reals ($5 billion) over the next seven years.
Congress approved the law late last year but Rousseff vetoed the part that decreased the percentage of petroleum royalties going to producing states from 26.25 to 20 percent. Non-producing states are to see their share increase from 7 to 21 percent.
The central government sees its share of royalties drop from 30 percent to 20 percent. The rest of money goes to municipal governments in producing states.
Congress overrode the presidential veto last week.
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