Maputo, Oct, 8, 2025 (Lusa) - Mozambique's government considers Galp's appeal to the arbitration court to be normal, saying that it is only defending the country's interests in the dispute over the taxation of the sale of the Portuguese oil company's stake in a gas project.
"What we have to ensure is that Mozambique gets all the benefits to which it is entitled in any exploration project, in any activity that necessarily involves earning or extracting any resource or exploiting any asset that belongs to Mozambicans," said government spokesman Inocêncio Impissa.
"Let the Mozambicans also make the gains that they are entitled to by law. That's it. We don't think there's anything exaggerated so far," he said, speaking to journalists after the weekly cabinet meeting on Tuesday in Maputo.
Portuguese oil company Galp announced on Tuesday that it had formally taken the first step towards resolving the dispute with Mozambique's tax authorities in an international arbitration court, in a case concerning the amount of capital gains tax.
"Galp will request an assessment of the conduct of the Mozambican state in relation to the dispute over capital gains tax arising from the sale of Galp's stake in Mozambique's Area 4; this notification marks the first step towards the start of the arbitration process," reads a statement sent to the Portuguese Securities Market Commission (CMVM), without giving details of the amounts at stake.
"It doesn't mean that going to arbitration means winning or not winning a particular dispute. It's just another forum to discuss the rights of the parties. I don't think there's any problem," said Mozambique's government spokesman.
Inocêncio Impissa recalled that "it is the prerogative of either party to resort to arbitration", but emphasised that "the most important thing is that everyone is doing their part in full", insisting: "And what I can tell you is that Mozambique is only positioning itself based on the agreement signed and within the framework of what it is allowed by law".
Galp said that "it has shown total willingness to comply with all tax obligations and to find a way forward" and that "resorting to legal mechanisms, both national and international, is a step that the company is obliged to take, but which it has always sought to avoid, favouring constructive dialogue with the Mozambican authorities with a view to clarifying the matter".
On 8 August, the Centre for Public Integrity (CIP), a Mozambican civil society organisation, considered this dispute, which it put at €162 million, between the Tax Authority (AT) and Galp to be a "test" of Mozambique's economic sovereignty.
At issue is the “tax dispute” that followed the conclusion of the sale, last March, of Galp's 10% stake to the United Arab Emirates state oil company (ADNOC), in Area 4 of the Rovuma Basin, in the north of the country, for natural gas production, which, according to the CIP "tests Mozambique's economic sovereignty and the responsibility of one of the largest foreign investors in the country".
In an analysis of the dispute, CIP recalls that the AT “notified the oil company to pay capital gains tax totalling €162 million, equivalent to 12 billion meticais”.
"This amount results from applying the effective rate of 17.6%, provided for in the Mozambican oil tax regime, to a capital gain estimated by the AT at around €920 million. In stark contrast, Galp contests the assessment, claiming a taxable capital gain of only €26 million, a figure 35 times lower than that calculated by the AT," reads the CIP report.
For the civil society organisation created in 2005 and which monitors and promotes the integrity and transparency of public authorities and the state, Galp's position “is even more questionable when, in the same period, the company reports to its shareholders an accounting gain of €147 million from the same transaction, showing a glaring inconsistency between what it declares to the tax authorities and what it communicates to its investors”.
It adds that Galp's decision "to resort to international arbitration at the World Bank's ICSID [International Centre for Settlement of Investment Disputes], predictably based on a stabilisation clause in the 2007 Concession Contract, represents a tactic known as a war of attrition".
The aim is to "exploit the profound asymmetry of financial power between the company and the Mozambican state, forcing the country to accept an unfavourable agreement to avoid exorbitant legal costs, conservatively estimated at between $6 and $8 million. These costs represent between 3.4% and 4.6% of the total amount of tax due," said CIP.
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