Brazil’s Lula meets foes to new oil plan

BRASILIA, (Reuters) – Brazilian President Luiz  Inacio Lula da Silva tried yesterday to overcome opposition by  three state governors to a legislative proposal he hopes will  make the country a top oil producer and help fight poverty.

Lula’s government will unveil today a legal framework  to develop massive new off-shore oil deposits, which triggered  euphoria and expectations of newfound wealth in Latin America’s  largest country when they were announced in 2007.

The Brazilian leader received late yesterday the governors  of Rio de Janeiro, Sao Paulo and Espirito Santo, the nation’s  three major oil-producing states. They oppose Lula’s plans to  share future oil revenue with states that do not produce oil.

Rio de Janeiro Governor Sergio Cabral, whose state harbors  many of the country’s oil companies and installations, said on  Friday the government was acting like Robin Hood in proposing  to redistribute oil revenue.

He added that the government also was raising false hopes  that oil was a panacea for all Brazil’s troubles.
Cabral intended to propose to Lula that the government  maintain current oil laws and simply increase taxes and  royalties to boost the state’s share, O Globo newspaper  reported yesterday.
Lula was to present various formulas of divvying up the  royalties in hopes of winning over the governors, local media  reported during the weekend.

The three governors, including Espirito Santo state  Governor Paulo Hartung, threatened to spoil the show for Lula,  who intends to present the proposal in an elaborate ceremony in  the capital Brasilia.

Cabral and Sao Paulo state Governor Jose Serra have not  confirmed their presence at the presentation on Monday.

Lula hopes his proposal to distribute oil wealth more  widely, particularly on health and education, will benefit his  chief of staff and handpicked presidential candidate, Dilma  Rousseff, in next year’s election.
Lula is barred from running for another term.

Energy Minister Edison Lobao said yesterday that Lula would  send the bills to Congress on a fast-track, which means each  house of Congress has 45 days to vote on the proposal.

Rousseff, who was Lula’s energy minister from January 2003  to June 2005, has been instrumental in shaping the new oil  framework and will take center stage beside Lula during the  presentation ceremony.