Mozambique 2 Feb: Continued instability doesn't deter foreign investors, but long delays might
Good afternoon.
Yesterday, Monday 1 February, South African energy firm Sasol announced they had secured government approval for their project to drill for oil in (beautiful) Inhassoro, north of Vilanculos in Inhambane. Zitamar’s coverage of the news has sparked debates on social media over whether the news is good or bad for the local area - with the potential for environmental damage to be weighed against extra jobs for locals.
SEE: Sasol wins government approval for Mozambique’s first oil well
The delay in approving the project, which was submitted by Sasol at the beginning of last year with hopes it would be sanctioned by mid-2015, shows how overstretched Mozambique’s petroleum regulator, INP, and the Ministry of Mineral Resources and Energy (MIREME) are right now. Energy investors complained throughout Nyusi’s first year of government that the backlog of project approvals just kept building up. These hold ups are likely to continue into 2016. With discussions with winners in Mozambique’s next licencing round due to start in the next month or so, negotiations with Anadarko over the Area 1 development still ongoing, and Eni’s floating LNG project still awaiting approval, INP, MIREME and the ministry of finance still have a lot on their plate.
Another deal which we now understand has hit delays is that of an investment fund, linked to telecoms tycoon Mo Ibrahim, buying the Extra chain of supermarkets and ‘cash & carry’s from Mozambican holding company ADC. The deal was revealed by Zitamar News on Monday. Since the $3.4 billion sale of his Celtel telecoms company, Ibrahim has become best known for his charitable foundation’s $5 million prize for exemplary African leadership. Coincidentally, the first winner of the award, back in 2007, was Mozambique’s own Joaquim Chissano.
SEE: Mo Ibrahim PE fund swoops for Mozambique supermarket chain
Mozambique would arguably benefit from that man’s leadership at the moment, as the current administration struggles to get a grip on a worsening crisis with Renamo. Reports of attacks are increasing in frequency and severity, while the beleaguered people of north-eastern Tete province continue to stream across the border to Malawi. They now number more than 4,000, Zitamar reports today.
SEE: Malawi: 4,000 refugees flee ongoing terror in Mozambique
It’s not all good news on the business front, either. The Moma heavy sands mine in Nampula, one of the country’s first ‘megaprojects’ after the end of Mozambique’s civil war, remains in trouble as it continues to work with its lenders to find a solution to keep the company from bankruptcy. Kenmare Resources, which owns the mine, says it has $100 million on the table from an Omani sovereign wealth fund but it needs agreement of shareholders and lenders to free up the cash. Meanwhile, market conditions for what the mine produces remain tricky.
SEE: Mozambique heavy sands miner defaults on debt
There is now a new way of keeping up with the latest headlines from Zitamar. We have launched a channel on Telegram, a messaging service similar to Whatsapp which works on mobile phones, computers, tablets - you name it. Every time we publish a new article - usually 2-3 times a day - the headline and link will be sent there first.
Why not just use Whatsapp? Telegram provides greater functionality for us and you - it works well on desktops and tablets, as well as phones - and provides greater privacy for you, as you don’t have to let us know your phone number.
Telegram is already used by media organisations including the BBC, CNN, and The Guardian. Follow this link to download the app and subscribe to our channel: https://telegram.me/zitamarnews
Have a great week