Mozambique: Sasol declared US$ 99.8 million non-eligible “recoverable costs” – General State Account

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Mozambique: Sasol declared US$ 99.8 million non-eligible “recoverable costs” – General State Account

2:36 CAT | 11 Jun 2020

Temane. [File photo: Sasol]

The preliminary results of Sasol’s audited accounts has revealed additional recoverable costs, the Mozambican government understanding that around US$100 million is not eligible.

After suspicions of inflated costs, the Mozambican government started auditing the accounts of oil companies involved in oil and gas extraction in Mozambique, including South African petrochemical company Sasol’s operation in the Pande and Temane blocks, Inhambane province.

According to the 2019 General State Account (CGE), to which ‘O País’ has enjoyed access, preliminary results found that for 2017, of the US$148.7 million reported as recoverable by Sasol, about US$50.5 million dollars were ineligible for recovery, and that for 2018, of the US$114.4 million declared, the government does not recognise about US$49.3 million, making US$99.8 million that the executive considers not eligible.

Published this Tuesday on the Ministry of Economy and Finance’s official web page, the CGE indicates that the government is awaiting a reply from the South African petrochemical company.

Rovuma basin

As for the Rovuma Basin gas fields, it was found that for Area 1, of a total of US$907.4 million reported as recoverable for the three years, US$11.2 million was not eligible.

In relation to Area 4, out of a total of US$1,059.5 million reported as recoverable, US$22.2 million are not recognised by the Maputo executive.

“Regarding the process of certification of conformity of recoverable costs declared by concessionaires MRV formerly Eni (Area 4) and Total formerly Anadarko (Area 1), the final audit reports have been finalised and issued – on the recoverable costs related to the audit reports of the financial years 2015, 2016 and 2017, from both concession areas,” the General State Account indicates.

At this moment, the audit of costs incurred in 2017 by Coral Sul in Area 4 of the Rovuma Basin, Cabo Delgado, which will be the first liquefied natural gas enterprise to start production, is underway, and should be completed by the end of September.

A recoverable cost is deducted from taxes that oil companies pay to the state, meaning that should companies inflate the costs of their hydrocarbon research operations, it lowers the revenue pool for the public coffers, an argument which works the same the other way round.

Source: O País