No decision, Repetro can disrupt 15th round of concessions

The impasse around the accession of the State of Rio to the Repetro — special tax regime that exempts the acquisition of equipment in the country and abroad for the oil industry — worries the sector on the eve of the 15th round of concessions of the National Agency of the EP Oil (ANP), scheduled for today. Initiatives in the Legislative Assembly of the State of Rio (ALERJ) propose limiting the tax waiver for investments in the sector, contrary to the recent accession of the State Government to the Repetro. The clash between executive and legislative in Rio may be reflected not only in the outcome of the auction, but mainly in the development of the Fluminense industry of goods and services for the petroleum sector.

Although other oil-producing states such as Sao Paulo and Espírito Santo have already adhered to the early renewal of the Repetro, by reducing from 18% to 3% The incidence of ICMS in the acquisition and importation of equipment used during the operating phases and Oil production, the river still doesn't have a definition. As there is hardly any solution until the day of the auction, which will offer areas on the Fluminense coast, industry executives warn that oil companies can transfer their bases to other States, as well as order equipment outside the river. The Federation of Rio State Industries (Firjan) estimates that around 100,000 jobs are at risk.

The Government of Rio formalized on 5 February of this year the accession to the Repetro, extended until 2040 by the federal government at the end of 2017. However, the decree was questioned three days later by the MEP Luiz Paulo Corrêa da Rocha, leader of the PSDB in Alerj. He proposed a legislative decree to bear the effects of accession claiming that the state accounts crisis does not recommend the tax waiver.

-we're stretching the rope in the oil field. There is no guarantee that these investments will be made in Rio. We gave several benefits to the COMPERJ, and there was still no return. The sharing grants oil-profit to the union and leaves little to the river. The basins of Campos and Santos are fundamental to the economic and social development of the state of Rio. We want the Repetro, but we want to include the defense of some points concerning oil and gas in which the state was deeply harmed by Petrobras and others, as well as by the Union-says Luiz Paulo. — The state Government should have sent a bill to Alerj instead of publishing a decree.

Decree is on the agenda at Alerj

The legislative decree of Luiz Paulo is to be voted on tomorrow, the day before the event of the ANP. This is because the state government did not send, until last Friday, a bill as requested by MEPs, justifies André Ceciliano (PT), President-in-Office of ALERJ. He is also the author of a project that limits the exemption of the ICMS provided in the Repetro only to the stage of exploitation of the fields. In his proposal, the oil companies would pay 20% of the ICMS in the acquisition of equipment for the development and production phase, precisely to which more demand that type of investment.

According to Ceciliano, the state members agree to dialogue on some points, such as the extension of the Repetro to mature fields and to the supplying companies already installed in Rio.

— This percentage of ICMS may be negotiated with the Government of the state. The river has already lost in 1988, when the VAT collection in the sector (oil) has become the destination and not the origin. If we give up everything, we will lose a lot — says Ceciliano. -We are debating with everyone. What you can't have is a threat, just like the oil companies are doing. We do not want to give exemption from ICMS to companies that will bring equipment from abroad to the development stage.

On the other side, the state secretary of the Civil House and Economic development, Chaudhary aureus, says that the government can send a new bill to the ALERJ, but keeping the conditions already made in the decree that formalized the accession of the river to the Repetro, by means of the National Council of Treasury Policy (CONFAZ):

— Let's look at the possibility of forwarding a bill, but it will be the same thing. There's no point in disconfiguring what's already settled. The Repetro is important to confirm the river as an investment destination. We can't take the risk of rehashing. If this occurs, the sector will Judicializar (the issue), as there is an understanding that this has been defined in federal legislation.

According to the manager of oil, gas and Naval industry of Firjan, Karine Fran, there are in the river about 600 suppliers of the sector. She estimates that the limitation of Repetro would lead many to migrate to other states, threatening up to 100,000 vacancies:

— The impact on the Rio economy is too great. With the resumption of activities in the oil sector, the river has one more chance to be protagonist, reaping the benefits of development.

For an auction-enabled oil executive, if the river does not adhere to the Repetro, the result of the 15th round may be impaired. A less profitable block in Campos or Santos basins may not be topped with the reduction of bids to compensate for eventual increase in tax costs in investments.

— if until the auction the theme is not resolved, it will bring insecurity to the investor — says the source.

Decius Oddone, Director-General of the ANP, estimates that approximately R $3.5 billion will be collected in the 15th round and Fourth of the pre-salt in June, which may result in potential investments in the country — a good part of the Rio — of US $66 billion in 35 years of concessions.

-The approval of the Repetro is important for the resumption of investments in the local industry. The state of Rio has suffered a lot. The Campos Basin stood for ten years with no supply of exploratory areas. I hope we can continue to attract investments — highlights Oddone.

On Monday, the Minister of Mines and Energy, Fernando Coelho Filho, said to expect the river to soon define its adherence to the Repetro:

— I hope it doesn't affect interest in the auction. We are very focused, the federal government has interface with the river, we know the importance (of the Repetro). We need to continue to send continuous signs of improvement so that investments can continue to happen.

Cláudio Makarovisky, president of the Brazilian Association of Petroleum Services Companies (Abespetro), says he is concerned:

— The end of uncertainty in relation to the Repetro, which is the icing on the cake, is key to attracting these investments.

The Executive Secretary of the Brazilian Petroleum Institute (IBP), Antonio Guimarães, recalls that the sector will generate in the country 250,000 jobs in the coming years, of which about 120,000 in Rio, on account of the main fields of pre-salt:

— I trust that ALERJ will make the decisions not to bring uncertainties. Source: The Globe

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