After some problems with the existing agreement, the Ministry of Energy
said the new concessionary agreements will change to increase profits
for the state, Sources from the Ministry of Energy say for Top Channel
that the main change is what gives the government the right to receive
revenues from the oil concessionary in the first year of the agreement.
The current agreement let oil companies pay 10% of the production for royalties, and no tax on profit until they have taken back whatever cost they invested.
But this has left room for abuses. Although the market has companies that operate for more than 10 years, none of them has paid the tax on profit, saying they have not recovered their costs yet.
The Ministry of Energy say the companies will be forced to pay from the first year. From sales, 90% will go for costs and 10% will be considered as net profit for which they will pay tax, additional to royalties.
The Ministry say that another element that will change is the fiscal stability. In the existing agreements, companies are protected for the entire duration of their agreement. If the government tries to change taxes, they will have to compensate companies. New agreements will be only for the first 12 years, not the entire concessionary duration. This menas that after this the government will be able to increase taxes.
The Ministry say the new financial terms and conditions will be implemented in the current agreements, such as that of the “Delek Group” for Dumrea and Shell for Block 4. Sources from the Ministry say that after the recent clashes they will renegotiate the agreement with Bankers Petroleum, to reach the state’s profits.
Top Channel
