The Mozambican business community has described the Government’s $176.1 million (11.1 billion meticais) claim against Galp — related to the sale of its stake in the Area 4 natural gas project in the Rovuma Basin, northern Mozambique — as a “matter of sovereignty.”
“It is, in our view, a question of sovereignty. Based on what is established by the law and other legal provisions, the sale of a given asset gives rise to capital gains. Now, regarding the calculation mechanism, we encourage both parties to sit down and determine to what extent the amount paid or to be paid corresponds to what the law provides,” said Onório Manuel, Vice-President of the Confederation of Mozambican Economic Associations (CTA).
Speaking on the sidelines of the 20th Annual Private Sector Conference (CASP), which began on Wednesday, November 12, in Maputo, the CTA representative called for dialogue between the parties, stressing that the private sector must fulfill its tax obligations so that the State can ensure a healthy business environment.
“In fact, we believe this is not a complex issue in its entirety, since there is a legal basis — it’s just a matter of reconciling figures. As CTA, we encourage Galp and the Government to sit down together,” he emphasized, as quoted by Lusa.
Recently, Mozambique’s Tax Authority (AT) notified Galp, demanding $176.1 million related to the sale of the company’s stake in the project. The tax office warned that the amount “could increase” and confirmed that enforcement proceedings are underway. According to the AT, the outstanding amount may still be revised upward, as a detailed review of the transaction — completed in March of this year — is ongoing.
The sale reportedly earned Galp 56.2 billion meticais ($881 million), with potential additional payments of up to 25.5 billion meticais ($400 million) depending on the final investment decision for the Rovuma LNG project.
For its part, Galp, the Portuguese oil and gas company with international operations, stated that there is no legal basis for the Mozambican tax authority’s claim.
“We believe there is no legal basis for this claim. We are very committed to finding a solution with the Mozambican Government,” said João Diogo Silva, Co-CEO of Galp, during a conference call with analysts on the company’s third-quarter results.
“Galp has been in Mozambique for more than 65 years. We have a strong presence in the downstream business and we fully respect this country,” he added, highlighting the company’s long-standing presence in Mozambique.
Source: Diário Económico
