Revenue from the extractive sector in Mozambique hit almost $400 million in 2012 thanks to the introduction of capital gains tax in the country according to a new report by the Extractive Industry Transparency Initiative, EITI.
The rise in revenue is largely attributable to the US $170m capital gains tax (CGT) payment made by the petroleum company Cove Energy from the sale of its assets to Thailand’s PTT, although payments from other companies also increased.
The payment made by Cove according to the EITI underpins the petroleum industry’s growing importance for generating growth in the country despite falling gas prices although Mozambique also has significant mining activities, payments from oil and gas companies represented 80% of the government’s extractive revenue in 2012.
Capital gains tax payments deriving from the sales of assets are expected to generate government revenue in the short term before the country starts its first LNG exports.
The 2012 report describes for the first time the allocation of gas royalties from company to the state with Sasol Petroleum Temane, the only gas project currently producing, transferred gas worth roughly US $2.5 million to the government. The National Petroleum Institute, on behalf of the government, allocated roughly 10% of the gas to the state-owned petroleum company, ENH, and 90% to Matola Gas Company (MGC).
MGC is jointly owned by ENH and foreign and local investors. MCG sold the gas to industrial companies and to AutoGas, which converts the gas into fuel for cars. MGC transfers its earnings to the national treasury under the supervision of the National Petroleum Institute.[twitter-follow screen_name=’oilnewskenya’]