Diamantino de Azevedo presented the legislative authorization law on fiscal, customs and administrative incentives for the construction of the Cabinda refinery.
The law, which authorizes the President of the Republic to grant tax incentives for the Cabinda refinery construction project, such as exemption, fixing and reduction of taxes, fees and charges, was approved unanimously by the National Assembly, with 163 votes in favor, none against and no abstentions.
During the presentation of the document, the Minister of Mineral Resources, Oil and Gas said that President João Lourenço may grant tax and customs incentives, namely mechanisms for phased application of taxes, accelerated forms of amortization and reintegration, exemption from withholding taxes and the establishment of fiscal stability clauses.
The incentives foreseen in the current Private Investment Law are insufficient to make the investment economically viable, stressed the minister.
Diamantino de Azevedo noted that although Angola is an oil producing country, its refining sector has only one refinery, with a refining capacity of 65,000 barrels of oil per day, which only covers about 20 percent of the consumption of oil derivatives in the country.
The remainder is imported, which implies a large expenditure of foreign exchange, "which could be used in public investments and other expenses," he said.
"In order to overcome the current situation and the growing expense, the government has defined a refining strategy, which includes the following axes: construction of the Cabinda refinery, construction of the Lobito refinery, construction of the Soyo refinery and the modernization and optimization of the Luanda refinery," he said.
The Cabinda refinery project, which is expected to generate about 2,000 jobs, including 400 direct jobs, aims to build and operate a refinery with a production capacity of 65,000 barrels of oil per day, in the commune of Malembo, Cabinda province.
A partnership between Sonangol through its subsidiary Sonaref SA, with 10 percent, and GemCorp Trading, with 90 percent, the initial investment is estimated at US$650 million for the manufacture and assembly of refining equipment, which could reach US$920 million, with the construction and improvement of infrastructure, access routes, roads, bridge reinforcement and support facilities for refining activities.
In his answer to the deputies, Diamantino de Azevedo said that GemCorp was not the winner of the public tender for the construction of the project, but its choice happened because, after about a year, the chosen promoter did not demonstrate the capacity to carry it out.
"So we had to terminate the contract and since we saw that possibly another year was needed for a new contract, we looked at all the other proposals that participated in the first tender and selected the current project promoter, which does in consortium with Sonangol," he explained.
The governor informed that the technological component of the project is being built in Houston, in the United States, by Vfuels, with the participation of another foreign company, the Lebanese Lambert, and national companies.
According to Diamantino de Azevedo, GemCopr was chosen for its financial capacity and experience, proven by the conclusion of a similar project in Liberia.
The minister underlined that the Cabinda refinery construction will occur in three phases. In the first phase, 30 thousand barrels of oil per day will be processed, to produce diesel and JET A1, while in the second phase, 60 thousand barrels will be processed and diesel, gasoline and LPG will be produced, and in the third phase, a processing unit will be added to allow the transformation of fuel into diesel and gasoline.
"The materialization of initiatives of this dimension must take into account, that the investment in the refining sector is capital intensive, unattractive and dependent on the volatility of oil prices in the international market, hence the need to adopt tax incentive measures, which guarantee the economics of the project and the return on investment," said the minister.
Also this Thursday, the National Assembly approved the draft laws revoking the Organic Law of Organization and Functioning of the Constitutional Court, the Law of Constitutional Procedure, amending the Law of Court Fees and Court Levels, amending the Law of Private Investment, of delimitation of Economic Activity and the General Regime of the Activity of Financial Institutions.
