Reuters – Mozambique wants to impose a capital gains tax on the sale of Cove Energy, the Africa-focused gas explorer at the centre of a bidding war.
Minerals Minister Esperanca Bias said on Thursday the government wants to introduce the tax to benefit from a transaction linked to its own resources.
Mozambique has become a target for resource-hungry investors due to its vast reserves of coking coal and major gas discoveries off its shores.
Royal Dutch Shell Plc made an $1.6- billion offer for Cove after the UK-listed company put itself up for sale and was immediately trumped by Thai state-controlled oil and gas group PTT with a bid worth $1.8-billion.
The overseas investment arm of Indian oil producer Oil and Natural Gas Corp and gas distribution company GAIL India have also said they may join the bidding war.
Cove’s main asset is an 8.5%t stake in the Rovuma Offshore Area 1, where operator Anadarko said recoverable reserves could top 30 trillion cubic feet of natural gas.
“We are monitoring the negotiations, and what we have said is that we are going to put in place a capital gains tax,” Bias told journalists.
She said the level of the tax had yet to be decided and the government would write this into law to be applied to future deals as well.
“We are not in favour of any company in particular, but as we need to develop an LNG (liquefied natural gas) plant in the country, we would prefer a company with enough capital and expertise to help in that plan,” Bias said.
Analysts said this could put Shell in a strong position.
“We consider the most preferred bidder to be Shell, with an established credentials and an LNG track record that is capable of a timely monetization of the gas resource base,” FirstEnergy Capital said in a note.
Officials at Cove, which closed 6.6%t lower at 226 pence, declined to comment. The British oil and gas explore put itself up for sale in January.
Its main shareholders include Standard Life, M&G Investment Management, Fidelity Worldwide, F&C Asset Management and J.P. Morgan Asset Management UK, according to Thomson One data.