Private sector and State at loggerheads over local content quotas – Mozambique

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Private sector and State at loggerheads over local content quotas – Mozambique

3:39 CAT | 13 Jul 2018

The Mozambican private sector wants the law to ensure that the country’s companies are present in 25 percent of the businesses related to the oil and gas projects, a quota above the Government’s proposal.

“We (the private sector) want 25 percent, the Ministry of Economy and Finance wants 10 percent. Maybe 18 percent will be reached”, said Florivaldo Mucave, deputy-chair for the mineral and energy resources department of the Confederation of Economic Associations of Mozambique (CTA), the largest Mozambican employers’ association.

Mucave was speaking on Wednesday in the Mozambican capital, Maputo, during a conference on local content, meaning the quota of supplies and acquisitions of goods and services for the oil and gas megaprojects which should be attributed to Mozambican companies by law as a way to boost the economy .

The meeting was aimed to find a common and legal way for a cooperation between national companies and multinationals operating in the sector.

Mucave said it is necessary for the Mozambican side to have a arger piece of the pie in order to create a broader tax base.

“They (Government) cannot work against us because they want our taxes. They have to help us grow in order for us to pay taxes,” he added.

The CTA and the Ministry of Economy and Finance (MEF) have been negotiating the proposed local content law since mid-2017 and in May the basic principles were approved.

However, the Mucave believes what was approved by the MEF “has nothing to do with what we agreed on.”

Enilde Sarmento, MEF’s head of department, who attended Wednesday’s conference, agreed to the demands of the business people, but without compromising on percentages.

Another debate related to the local content issue, was connected to the qualification of the national workforce, that they be recruited by those industries, instead of foreign workers.

The CTA advocates that multinationals create a joint fund for training and capacity building as well as having this investment tax deductible.

“What we lack is the will to do,” explained Mucave, sighting an example of the case of foreign workers who are in the country doing drilling, an activity training that lasts for 18 months.

However, the work visas of these professionals last for eight years.

The Local Content Conference in the Oil and Gas sector in Mozambique is promoted by the National Hydrocarbons Company (ENH) and it took place on Wednesday the 11th to Thursday the 12th of July .

The conference came as Mozambique is preparing to start exporting its natural gas resources discovered in the Rovuma basin off the north coast of Mozambique 1,500 kilometres from the capital Maputo, in four years time.

Source: Lusa