Mozambique Oil & Gas Legislation: Council of Ministers Approve New Regulations

Mozambique’s new petroleum operations regulations, pursuant to the petroleum law enacted through Law No. 21/2014 of August 18, 2014 have been approved by the Council of Ministers.

The new statute regulates different matters relating to the award of rights and the conduct of oil and gas reconnaissance, exploration and production operations, as well as the construction and operation of oil and gas pipelines and other facilities for petroleum operations.

It is worth highlighting the inclusion of some provisions relating to the domestic market supply, including with regard to the terms and conditions of the natural gas sales agreements to be entered into between the concessionaires and ENH.

The new regulations went into force January 1, 2016.

Besides having regulated the petroleum law, the Council of Ministers has also enacted Decree No. 32/2015, December 31, 2015, whereby the specific tax and fiscal benefits regime for petroleum operations are set forth in Law No. 27/2014, of September 23, 2014 were regulated.

The rules that stand out comprise those relating to the assessment and payment of Petroleum Production Tax (“IPP”) to be paid by the concessionaires and the 50% reduction in IPP rates whenever the production is aimed for the development of the local industry and the sale is made to ENH.

Also worth mentioning are the specific rules relating to the production sharing mechanism and Corporate Income Tax (IRPC), in particular in respect of the taxable income determination and the deductibility and amortization of costs and charges. The new regulations also came into force January 1.

In addition to the above and part of the legislative reform of the petroleum sector, through Decree No. 29/2015, of December 28, 2015, the Council of Ministers approved the new by-laws of ENH, with a view to adapt them to the legal framework applicable to state-owned companies set forth in Law No. 6/2012, of February 8, 2012. The previous by-laws have been repealed.