São Sebastião has a drop in royalties amid the tragedy – 02/24/2023 – Panel

The tragedy caused by the rains hit São Sebastião (SP) at a time when one of the main components of its budget was falling, the receipt of royalties for oil exploration in its territory.

The forecast for this year, according to the ANP (National Petroleum Agency), is for the municipality to be entitled to R$ 100.2 million, against R$ 145.2 million last year, a reduction of 31%. The calculation is based on the expected exploitation of the product and the price of a barrel of oil on the international market.

The share of royalties in the municipal budget shows a downward trend. In 2023, it will be responsible for 7.14% of São Sebastião’s revenues, against 11.8% in 2022 and 12.6% in 2021.

With a still uncalculated cost to rebuild the affected areas and invest in prevention works, the city will have to reallocate resources from other areas.

A relief may come from the solution of a legal dispute involving São Sebastião and Ilhabela for the division of this revenue. The two neighboring municipalities differ over the territorial limits of nine oil fields.

In December 2022, the president of the STF, Rosa Weber, determined that around BRL 1 billion in royalties claimed by São Sebastião be deposited in court, until a final decision is reached.

“This resource would be essential to deal with the consequences of this catastrophe”, says the secretary of Legal Affairs of São Sebastião, César Zimmer.

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