Her veto changes the bill so that producer states continue to receive royalties on output from existing oil concessions. She signed most of the rest of the bill as passed earlier this month by Congress, redistributing royalties from all future oil concessions so that non-producing states get a greater share. Announcing the veto Friday afternoon, Gleisi Hoffmann, Rousseff's chief of staff, said the president's veto sought to "fully protect existing contracts" while ensuring the bill's intent to redistribute Brazil's growing oil wealth.
The legislation, approved with the overwhelming support of states with no oil production, is an effort to spread oil revenues more evenly nation-wide as massive new offshore oil discoveries near Rio de Janeiro and other south-eastern states begin producing in the coming years. The new discoveries, if developed successfully, could catapult Brazil into the ranks of the world's top petroleum producers.
Rousseff's changes also mandate that all royalties from future production contracts be used to fund educational programs. The shift, which wrests funds away from local politicians and their pet projects in producer states, is important for a left-leaning Rousseff administration focused on continued efforts to eradicate poverty across Latin America's biggest country.
The new law is also crucial for Brazil's oil industry, which has been hobbled in recent years by regulatory uncertainty surrounding the new discoveries. The royalties bill was passed a year ago by the Senate but held up in the lower house of Congress by opposition from Rousseff and the oil producing states.