* Rousseff plans partial veto of Royalty bill - source
* Rio says bill would cripple finances
By Paulo Prada
RIO DE JANEIRO, Nov 26 As many as 200,000 people
demonstrated in Rio de Janeiro on Monday to urge Brazilian
President Dilma Rousseff to veto a bill that local officials say
could cost Rio state billions of dollars in lost oil revenue and
cripple plans to host the World Cup and Olympics.
Late Monday, a person familiar with the president's plans
said Rousseff is planning to veto at least part of the bill,
particularly a portion that redefines royalty payments for
existing oil production in Brazil.
The president, the person added, instead will propose that
Rio and Espirito Santo, the two states with most of Brazil's oil
output, continue to get a level of royalties from current
production similar to what they received last year. The partial
veto would not change parts of the bill that redefine oil
royalties from production at new fields.
For Rousseff, the protest raised the stakes on what may be
the most sensitive decision she has faced in her nearly
two-year-old government: How to distribute tens of billions of
dollars in expected revenues from a massive offshore oil field
that Brazil discovered in 2007.
The bill, passed by Congress this month, would spread the
windfall more evenly to Brazil's 26 states and federal district.
As submitted for her approval, however, it would also alter
royalties on existing production, angering Rio and other
southeastern states where most of Brazil's oil is located.
Rousseff has until Friday to veto the bill, but is expected
to decide on the partial veto on Thursday, the person said.
Monday's event had attracted about 200,000 demonstrators by
early evening, according to police calculations.
The protest began with a march through Rio's colonial center
and was followed by a series of speeches, concerts, and
impromptu revelry that at times gave it a festive air. In recent
days, state officials plastered streets and buildings with
banners advertising the protest in large black and white
lettering and a command in red for the president: "Veto, Dilma."
Rio is spending tens of billions of dollars to build
stadiums and other infrastructure for the 2014 soccer World Cup
and the 2016 Summer Olympics - two marquee events expected to
attract hundreds of thousands of visitors.
Rio Governor Sergio Cabral, an ally of the president, led
the protest. He has cast the debate in dire language that
analysts say may exaggerate the financial stakes but has
nonetheless intensified political pressure on Rousseff.
The bill "would devastate the state budget and compromise
the future of Rio. The state would be inviable," Cabral told
journalists after the protest.
He urged Rousseff to veto parts of the bill dealing with
royalties for existing production, which he said would cost
producer states and cities 6.5 billion reais ($3.1 billion) in
Approving the bill could hurt Rousseff's relations with
Cabral's PMDB party, a large and ideologically shape-shifting
group that is a linchpin of the broad coalition that supports
her ruling Workers' Party.
Rousseff has vowed to further Brazil's efforts to reduce
poverty, in part by redistributing the windfalls from its
growing commodity exports - from oil and iron ore to foodstuffs.
Throughout the day Monday, police had cordoned off large
swaths of Rio's center, along the river-like bay that gives the
city its name. State and municipal officials facilitated
attendance by waiving subway and ferry fees and providing buses
from far-flung towns outside the capital.