Rio de Janeiro Up in Arms over Proposed Oil Royalty Bill

Thousands of Brazilians staged a protest against a bill on oil royalties distribution in the state of Rio de Janeiro on Wednesday, the local government said.

The bill, proposed by House Representative Ibsen Pinheiro, suggested royalties collected from pre-salt oil exploration should be divided equally among all Brazilian states, triggering protests in Rio which will lose at least 5 billion reais (US $3 billion) a year due to the proposed change of law. The current law stipulates that any state where oil is extracted is entitled to 60 percent of the royalties.

The southeastern states of Rio de Janeiro and Espirito Santo produces about 90 percent of the country's oil. The change of law will endanger the state's environmental protection programs, which are funded by oil royalties, Carlos Minc, Brazilian Environment Minister said.

Furthermore, according to local authorities, the loss of money will also hurt the capability of the state's capital city to host the 2016 Olympic Games and the finals of the 2014 World Cup.

Sergio Cabral, Rio's state governor, declared a holiday Wednesday, calling on residents to take part in the demonstration, which will later be participated by Cabral's political rivals and Espirito Santo's state governor, Paulo Hartung. However, the Ibsen bill has gained landslide approval in Brazil's House of Representatives on March 10 and is waiting to be voted by the Senate, which is likely to pass it as well.

Afterwards, the bill will go to President Luiz Inacio Lula da Silva, who has the power to veto it.

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