The trial that the Supreme Federal Court (STF) resumes this Wednesday (6) could redefine the distribution of oil royalties in Brazil and have a strong impact on the public accounts of producing states and municipalities. The mayor of Niterói, Rodrigo Neves (PDT), stated this Tuesday (05) that he is confident that the STF will declare unconstitutional Law 12.734, of 2012, which modifies the criteria for the distribution of royalties. However, he warned that the change could cause losses in the billions and seriously compromise the finances of producing states and municipalities, especially in Rio de Janeiro.
According to Rodrigo Neves, the legislation disregards the role of cities that concentrate oil production and therefore face greater social, economic, and environmental risks. He argues that the Constitution guarantees these entities a differentiated share in the revenues generated by the exploitation of natural resources.
"Law 12.734 is clearly unconstitutional because our Constitution guarantees that all municipalities and states that produce oil are entitled to royalties, just as municipalities and states that produce minerals are entitled to royalties from minerals extracted within their territory," the mayor stated.
Rodrigo Neves also argues that Rio de Janeiro has already accumulated historical losses in revenue, mainly due to rules related to the ICMS tax on oil. He believes that a broader redistribution of royalties would further aggravate the fiscal situation. "The municipalities and the state could go bankrupt if there is a division without criteria that take production into account," he stated.
Law 12.734 expands the distribution of royalties to all states and municipalities in the country. In practice, this reduces the share allocated to producing regions. Critics of the proposal point out that the change dilutes essential revenues for public investments and the maintenance of basic services.
The issue has been under review by the Supreme Federal Court (STF) for over a decade. Since 2013, a provisional decision has maintained the current distribution model, following challenges raised by producing states. Now, the Court must decide whether the rule will be maintained or if there will be a new division of resources.
According to the mayor of Niterói, the decision needs to consider the direct impacts on the producing cities and respect what he classifies as a constitutional guarantee. He states that royalties are not a benefit, but compensation for the effects of oil activity in these regions.
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