Opposition articulates overturn of oil export tax

The leader of the opposition in the Senate, Rogério Marinho (PL-RN) presented, this Wednesday (1st), a proposal to amend the Provisional Measure (MP 1.163/2022), which deals with the reencumbrance of fuels. His goal is to try to overthrow the new tax on oil exports, which should be instituted by the government through the measure. Marinho argues that Congress needs to react soon to defend the legal security of contracts and guarantee the continuity of investments throughout the oil chain, headed by Petrobras.

The 9.2% rate adopted for at least four months, the period in which the MP will be in force, was adopted by the government as a way to compensate for the only partial return since Tuesday (1st) of the collection of federal taxes PIS and Cofins on gasoline and ethanol.

“Creating an export tax is a bad idea. In addition to the increase in gasoline and ethanol, impacting workers’ bills, the government now directly affects investments in the oil and gas sector”, protested the senator on social networks.

According to him, in addition to the direct impacts on oil sales to several countries, with the risk of losing markets, the MP discourages research, exploration and production of the commodity. “I am afraid it will directly affect the smaller companies called junior oilswhich had been growing a lot in Brazil and which operate under the concession regime”, he added.

New tax undermines credibility and drives away investments in Brazil

In the senator’s assessment, the new tax, even if temporary, undermines the country’s credibility, in addition to increasing regulatory instability, unpredictability, in addition to reducing the results expected by current operators of blocks acquired in auctions that have already taken place. “The consequence will be the flight of investments to countries with more attractive conditions and less intervention”, he summarized.

Marinho cites Argentina as a negative example, whose export tax of 12%, adopted in 2018, harmed local soybean and corn producers with loss of earnings and international market. Finally, he understands that the tax on oil sets a “disastrous precedent” for all Brazilian exporters.

Political analysts already point out that, in addition to parliamentarians, the government’s decision also has the potential to irritate governors of oil producing states, fearful of insecurity for investors, considering that the charge will fall on already signed contracts. Independent producers, in turn, warn that there was no quarantine for the adoption of the measure, which disrupts even their suppliers. Representatives of agribusiness and mining fear that the sectors will be the next targets for similar measures.

Most senators, however, have not yet publicly expressed their views on the taxation, as they are waiting for the position of the President of the Senate, Rodrigo Pacheco (PSD-MG), in relation to the MP. Many believe that he could take time to install a commission to analyze the measure and let it lapse, giving the government a renewal for another four months.

Senator Alessandro Vieira (PSDB-SE), representative of a state that produces oil and gas, said that the Minister of Finance, Fernando Haddad, handled the difficult issue of fuel re-encumbrance well. For him, the minister’s actions ensured credibility for the forthcoming battles under the responsibility of his ministry. Haddad will have to create projects for a fiscal framework and carry out tax reform.

Also on the issue of oil taxation, Vieira says he understands that the government was right, by taking “an important measure to compensate for the loss of revenue caused by the partial exemption”.

Brazilian exports will be unfeasible if world oil prices fall

But experts heard by the People’s Gazette warn of the worrying signal that the country sends to the global oil and gas market, for not making it clear whether the export of crude oil taxed at almost 10% will really be something temporary or whether it could advance to much higher levels, depending on the fiscal circumstances or future policies. Brazil produces about 3 million barrels a day and exports 1 million, which guarantees participation in the strategic global exchange, which may grow considering the gigantic volumes yet to be explored in the pre-salt layer.

The current price per barrel, around US$ 80, even allows exporting companies to adjust to the impact of the announced taxation, although this is not healthy for their financial health, according to Armando Cavanha, sector consultant and professor at PUC-RJ. “But the concern continues.

Oil companies lose value and may cut jobs

He explains that, by dealing with a product with an internationally fixed price, exporters have their profitability linked to the cost structure of the country itself. “Everyone in the industry is scared. As we add a new lock, which can vary further, we immediately reduce the ability to export and affect the perception of external trust,” he noted. The first impact, he believes, can be seen in the jobs and reinvestments of the affected companies.

Proof that this is already happening came in the fall in the values ​​of the shares of Petrobras and of small oil companies in the country, registered on Wednesday (1st), under the effect of the publication in the Official Gazette of the Union of the creation of the new tax on its exports. 3R Petroleum dropped more than 12% and Petro Rio, almost 4%.

When announcing the measure on Tuesday (28), Minister Haddad stated that the oil export tax represents a loss of just 1% on Petrobras’ profit. But, behind the scenes, there are those who bet on the judicialization of the MP by dissatisfied private agents. They can allege losses with the sudden change in the economic environment and difficulties related to the consequences of the measure on their business planning.

Government prioritized popularity when adopting measure, says analyst

Consultant Adriano Pires, an energy specialist at the Brazilian Center for Infrastructure and Energy (CBIE), said he was surprised by the taxation of oil exports just to help confirm forecasts of federal revenue. For him, the government politicized the issue and gave more relevance to its own popularity than to the regulatory stability of the country. The instability of rules and legal uncertainty for oil producers in Brazil brought about by the tax is “bad news for outside investors”, who may start to fear the repetition of others in the future.

The Brazilian Institute of Petroleum and Gas (IBP) also expressed its opinion on the government’s decision to tax the export of crude oil. In a note, the largest entity in the sector warns of Brazil’s loss of competitiveness in the medium and long term due to the tax, “in addition to affecting national credibility with regard to the stability of the rules”.