DR Congo : President approves new Oil Code
(Ecofin Agency) - President of the Democratic Republic of Congo Joseph Kabila has approved a new oil code envisioned to enforce order on a haphazardly regulated sector, according to Engineeringnews.
The code, which was signed by the president last month but has not yet been published online, does not contain major changes from the text passed by parliament in June.
Moreover some activists feared that Kabila would amend the text before signing, as he has sometimes done in the past. The code enacts steep capital gain taxes and expands the state's role in the sector although it leaves unanswered important questions about its implementation, including the criteria for exploration permits.
Congo pumps 25 000 bo/d but hydrocarbons contribute close to half a billion dollars in annual state revenues. The government expects that exploration off the Atlantic coast and near its eastern border with Uganda will boost production.
The code replaces a 1981 law, which institutes a minimum capital gains tax between 35% and 45% on producers; a measure some analysts said could discourage investment. Meanwhile, the Anglo-French oil and gas company Perenco is Congo's only oil producer. France's Total and a company owned by Israeli billionaire Dan Gertler are exploring near Lake Albert, which connects the border with Uganda.
The law also specifies that the state must hold at least a 20% stake in all hydrocarbons projects. It introduces transparency measures, requiring public tenders for exploration and exploitation permits, and publication of the names of bidding companies.
The law however does not contain the disclosure of beneficial ownership of investors and is indefinite about the management of a fund earmarked for future generations.
Other important provisions, including the criteria for selecting candidates for exploration and production permits, must be elaborated on by the government, a process the hydrocarbons minister's chief of staff, Jean Muganza, said was under way.