Videocon to take heat of Mozambique tax norms

Dec 24 2012, 03:51 IST
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SummarySales of assets held by non-resident entities to be taxed at 32%.

the end of June, the group had a consolidated total debt (long-term and short- term borrowing) of R16,812.72 crore.

Videocon is the latest Indian firm to be to affected by changing policies in other countries. Earlier this year, Naveen-Jindal promoted Jindal Steel and Power dropped its $2.1-billion project in Bolivia after failing to receive assurances from the Bolivian government on adequate gas supply.

Airport developer, GMR Group was forced to vacate the Male airport after a new government in Maldives on November 27 cancelled the contract given to GMR-Malaysia Airports Holdings Berhad in 2010 by previous president Mohammed Nasheed.

Tata Power, which bought coal mines in Indonesia, has been impacted by a government directive that coal be sold at market prices, leading to a downgrade by Moodys in October.

Several oil and mining majors have been looking to invest in Mozambique, which is expected to become one of the worlds leading coal and gas exporters.

State-run refiner Bharat Petroleum (BPCL) also holds a 10% stake in the Rovuma basin, which is operated by US-major Anadarko Petroleum. BPCL said in a notice to the BSE on Friday that Anadarko has signed a heads of agreement (HOA) with Italys Eni, the operator of another block in Mozambique, for the coordinated development of common natural gas reservoirs in what it called a significant step in achieving the target of first LNG cargo by 2018.

A top BPCL official said the change in tax laws wont impact the company as it has no plans to sell the asset in the near future.

Mozambique is seeking to derive a bigger share of profits from its mineral wealth, as it faces criticism over granting huge tax breaks to foreign firms to attract investment after a civil war which ended in 1992.

This obviously will have some impact on sentiment. These companies are probably not going to be happy, but from the governments point of view they can make significant money from their natural wealth, Arvind Mahajan, a partner at KPMG India said.

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