Portuguese oil company Galp, which has an international presence, stated on Monday (27) that there is no legal basis for the Mozambican tax authority to demand $176.1 million (11.1 billion meticais) related to the sale of its stake in the Rovuma Basin Area 4 natural gas project, in northern Mozambique. The company affirmed that it is “fully committed” to finding a solution with the government.
“We believe there is no legal basis for this claim. We are very committed to finding a solution with the Mozambican government,” said Galp Co-CEO João Diogo Silva during a conference call with analysts discussing the company’s third-quarter results.
Recently, the Mozambican Tax Authority (AT) notified Galp, demanding payment of $176.1 million in connection with the sale of its stake in the same project. The authority warned that the amount “may increase” and that enforcement proceedings are underway.
When questioned about the dispute, Co-CEOs Maria João Carioca and João Diogo Silva emphasized that Galp complies with all its institutional obligations and follows every legal procedure.
“Galp has been in Mozambique for more than 65 years. We have a strong presence in the downstream business and hold great respect for this country,” said João Diogo Silva, underscoring the company’s long-standing operations in Mozambique.
Maria João Carioca added that the company does not foresee any additional cash flow risks in the last quarter of the year due to this dispute and that Galp “sees conditions to continue its presence in Mozambique.”
The tax dispute arose after the March completion of Galp’s sale of a 10% stake to the UAE state-owned oil company ADNOC, in a deal worth about $950 million (60 billion meticais).
Galp had already announced that it had formally initiated dispute resolution through an international arbitration tribunal, seeking legal clarification of its position with the Mozambican tax authorities.
Meanwhile, the Mozambican government stated last Thursday (23) that no negotiations are currently underway with Galp regarding this tax dispute, though it expressed confidence in the company’s “good judgment” to fulfill its fiscal obligations.
Source: Lusa
