The battle for pre-salt

Scientific societies go to Brasilia to try and reverse the loss of resources

Petrobras Disclosure / ABrOil platform: royaltiesPetrobras Disclosure / ABr

The Brazilian Academy of Sciences (ABC) and the Brazilian Society for the Advancement of Science (SBPC) prepared an offensive together with congressmen and senators to try and reverse losses in federal budget allocations for science and technology imposed by the legislation that established regulatory boundaries for the exploitation of oil in the pre-salt layer. Sanctioned with vetoes by President Luiz Inacio Lula da Silva in December of 2010, law 12.351 will already withdraw about R$900 million from the budget this year, according to the calculations of the Ministry of Science and Technology (MCT). Bloodletting was avoided through presidential decree, 7.403, which created transition rules, delaying the application of a new model for 2012, and submission of a bill to the Congress calling for a revision of the amount, which is currently under debate.

Currently, 12.5% of all royalties from oil exploration are destined for the MCT coffers. With the proposed changes, only a percentage of 20% of all royalties go to the so-called Social Fund, to then be distributed among the budgets for science and technology, health, education, sports and environment. Although this division is to be discussed by Congress, it’s unlikely that the MCT will continue to receive the same slice as before. “The threat is real and we must act,” says Jacob Palis, president of ABC and a researcher at the National Institute of Pure and Applied Mathematics (IMPA). “Let us approach the leaders of Congress to join the debate. A natural partnership is with the members of Parliament from São Paulo, Rio de Janeiro and Espirito Santo states, which were most adversely affected by changes in the funding allocation rules, but we want to talk to everyone, in the name of the best interests of the country, “he says.

If the scientific community discusses ways to avoid the loss of investments today, when oil was discovered in pre-salt, it was believed that such resources would increase the federal budget for science and technology. “This wealth could pull Brazil up from the point where it is now, investing in the quality of education, science, technology and innovation,” says the president of the SBPC, Helena Nader. “We are choosing the wrong path, it is to distribute the resources among municipalities. Of course, every mayor has a project that he or she considers important, but they are short-term projects. If we put these resources into education, science, and technology, we will be betting on today and tomorrow,” said Helena, who is a professor at the Federal University of São Paulo (UNIFESP) and a member of the coordination area for biology in FAPESP. The president of the SBPC cites the example of countries such as South Korea and China, which decided to invest heavily in education and innovation, and made great strides forward as a result. “We will need new money and it was not necessary to be so definitive. It could determine that science would receive money from pre-salt for 20 years, to move up a level for this period.”

Scientific entities are working with three scenarios. The most worrisome is the threat by members of Parliament, both from the government base and the opposition, to overturn the veto imposed by President Lula, which would bleed even more funding from the Union’s budget in favor of states and municipalities. “It would be a complete catastrophe,” says Deputy Newton Lima Neto (PT-SP), a former provost of the Federal University of São Carlos, who is a member of the Commission for Science, Technology and Communications in the Chamber. “The desire to increase spending on science and technology to 2% of GDP is a distant reality,” he says. A second scenario predicts there will be a vote on new legislation that would mitigate losses – project 8.051/2010, an initiative of the executive branch, which is pending in the Commission for Mines and Energy in the Chamber, and was attached to another bill, 1.618, presented in 2003, which also regulates the distribution of royalties. According to the narrator of the bill, Congressman Fernando Jordão (PMDB-RJ), it’s possible to perfect the text of the executive branch to avoid significant losses. “We have to be very careful, because research in the country must keep moving ever closer to new fields of inquiry, new technologies, new riches to be discovered, just as it was with pre-salt. I would very much like, in my report, to guarantee resources for research and education,” says the parliamentarian. One possibility, he adds, is to keep the current regime of sharing for the old exploration contracts, preserving the resources of the MCT and the Navy, and change the rule only for new contracts. A third, more palliative scenario, would be to extend the presidential decree, postponing losses until 2013, that is if Congress does not vote on the matter this year.

Aloizio Mercadante, minister of the MCT, has advocated an articulation of the scientific community as a way to prevent budget cuts. “Over the next nine years, we would lose R$12.2 billion of the R$16.9 billion we would receive. If this happens, it will be a huge historical mistake,” said Mercadante, citing an article by economist Celso Furtado from the mid-1970’s, which warned of the risk that Venezuela, with its large oil reserves, was hindering its development, importing products instead of stimulating new industry – which, did indeed happen. “If the pre-salt resources are consumed by public expenditure, we are leaving nothing for future generations,” said the minister.