Mozambique: Sasol Accused of Inflating Recoverable Costs

Oil field (file photo).

Maputo — The South African petro-chemical giant Sasol has inflated its "recoverable costs" in its oil and gas operations in Mozambique by about 100 million US dollars, according to audits ordered by the Mozambican government.

The preliminary results of the audit, according to a report on the independent television station STV, show that Sasol declared recoverable costs of 148.7 million dollars for its operations in the southern province of Inhambane in the 2017 financial year. But the audit found that, of this sum, 50.5 million dollars was not eligible for cost recovery.

It was the same story for 2018: Sasol claimed recoverable costs of 114.4 million dollars, but the government auditors calculated that 49.3 million dollars of this sum was not eligible. So taking the two years together, Sasol had overstated its recoverable costs by 99.8 million dollars, which has significant implications for the amount of tax it should be paying to the Mozambican state, since recoverable costs are deducted from tax payments.

These findings are included in the 2019 General State Account (CGE), now available on the website of the Ministry of Economy and Finance. The government is awaiting a response from Sasol to the audit.

Recoverable costs have also been overstated, though on a much smaller scale, by the companies exploiting the gas fields in the Rovuma Basin, off the coast of the northern province of Cabo Delgado.

For the three year period 2015-2017, the operator of Rovuma Basin Area One (now the French company Total, which took over last year from the US firm Anadarko) declared 904.7 million dollars in recoverable costs. The government says that 11.2 million dollars of this sum is not eligible for cost recovery.

As for Area Four, where the operator is the Italian energy company ENI, 1,059.5 million dollars in recoverable costs were claimed, and of this sum the government does not recognise 22.2 million dollars.

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