Mozambique 21 Dec: The state of Nyusi’s nation
Good afternoon - for the last time this year. Zitamar News will be taking a two-week break over the festive period, returning in early January - although we will continue to report any major breaking news on the website. Readers with current monthly subscriptions will have them extended by two weeks.
We had expected our last story of the year to be the results of the domestic gas projects tender, scheduled to be announced on 21 December after being postponed by a week. By today (Friday), Zitamar understands the regulator, INP, has given its decision to the ministry, MIREME, which now has to finalise the decision and make it public.
It’s been an eventful and troubled year for Mozambique, marked by continuing conflict between the government and Renamo and by a financial crisis precipitated by the discovery of $1.4 billion in hidden debts.
Yesterday, Zitamar reported on the central role that the current president of Mozambique, Filipe Nyusi, had in creating the companies that borrowed the money in secret. He has been noticeable by his absence from the government’s efforts to be more transparent about the deals - and was the chief absentee from the testimonies given to the parliamentary inquiry commission.
SEE: Leaked report shows President Nyusi’s central role in Mozambique hidden debts
A key finding of that commission is that the government guarantees for the debt were granted illegally - lending weight to the argument that Mozambique should refuse to honour them. Legal experts are divided over whether or not Mozambique could be pursued through English courts, but according to Joseph Hanlon, “discussions in London suggest that Mozambique would receive a more friendly response in English courts than it expects, and could refuse to recognise the guarantee of the secret debt.”
The IMF and international donors will also need to decide if they are ready to resume support to a regime led by one of the architects of the secret deals. They insisted on inquiries - but will they act on what those inquiries find?
Ideally, measures to ensure transparency and accountability will need to be put in place before revenues start flowing from the Rovuma Basin gas projects. On Monday, Portugal’s Galp gave its approval for the FLNG project - timed to give Nyusi something positive to point to in his State of the Nation speech that day. However, the process continues to drag on, and FID before the end of this year now looks impossible.
SEE: Galp gives go ahead for $10bn Mozambique floating LNG project
In the meantime, there are signs that transparency is going in the wrong direction. In Cabo Delgado, Nyusi’s home province and the location of the gas projects, a journalist at a community radio station was jailed for a year at the start of December for having quoted an employee of state electricity utility EDM against her wishes. The local court has been persuaded to set him free - but he still owes fines equivalent to a year’s wages.
SEE: Jailed journalist fined a year’s salary for quoting a Mozambique state employee
Until gas exports come online - at least five years away - Mozambique’s balance of payments will remain heavily reliant on existing commodity exports including coal, whose price and production have risen significantly towards the end of 2016. Renamo appears to have realised that this is an easy way of hitting the government where it hurts - attacking another coal train this week, the latest in a series of increasingly frequent such incidents.
SEE: Gunmen attack another coal train in central Mozambique
If peace can eventually be brought to Mozambique, it would provide relief to the country’s landlocked neighbours who also want to be able to rely on Mozambique’s transport corridors. Zimbabwe’s government has told Zitamar it is looking into a new line to link up the Nacala corridor, to increase its own coal exports.
SEE: Zimbabwe mulls rail links to Mozambique’s Nacala and Maputo ports
Many thanks to all our readers for your support in 2016, Zitamar’s first full year of operation. We wish you a happy and peaceful festive season, and look forward to continuing to provide you with breaking news and analysis from Mozambique throughout 2017.