Still paying off those tuna bonds
Still paying off those tuna bonds
Mozambique previous and current administrations borrowed (and wasted) money against the promise of gas riches that may never come
In today’s Daily Briefing:
EDM wants another oil-fired powership, this time in Maputo
Attacks continue in Cabo Delgado…
…leading to a graphite mine evacuation
Now teachers threaten strikes over new payscale
Ematum repayments provider reminder of Mozambique’s presource curse
Good afternoon. Weekly newspaper Savana leads today with a blast from the past: the rusty tuna fishing boats of Ematum, along with a headline of how much Mozambique has paid, and still has to pay, to the creditors who financed their purchase. Carta de Moçambique has the same story.
The figures are not new or surprising, but they are a reminder of the sticky situation Mozambique is still in thanks to the deal the Guebuza government struck with Privinvest and Credit Suisse in 2013. What is more, however, the Nyusi administration — through finance minister Adriano Maleiane — passed up numerous subsequent opportunities to improve the situation.
Maleiane’s biggest mistake was to exchange the bonds issued by Ematum, for sovereign bonds — making it impossible to refuse to honour the debt without a sovereign default, despite a ruling in Mozambique and potentially still in London that the debts were illegal.
That restructure, carried out in 2016, arranged for Mozambique to clear the debt with a one-off ‘bullet’ payment of $765m in 2023 — by which point Mozambique was supposed to be swimming in gas revenues. In reality, Mozambique now expects its 2023 revenues from LNG exports, which should start before the end of this year, to come to a grand total of $20m.
So those sovereign bonds of course had to be re-restructured. At that point, Maleiane could have reduced Mozambique’s liabilities by offering investors some potential upside from gas revenues — sharing the risk that the gas projects end up disappointing. He opted not to do so, unnecessarily keeping all that risk with Mozambique in the hope of future riches.
SEE: Gas hook taken out of Mozambique tuna bond
But now, the best guess is that by 2028, when Mozambique will face a $301m bill to the bondholders, the Coral South FLNG project will only be bringing in around $100m per year.
SEE: Coral South FLNG government revenues will be little and late, new study finds
Will other LNG projects be up and running by then? That’s anyone’s guess, as they are still threatened by the violent insurgency, the global energy transition, and competing gas projects in East Africa and further afield.
Mozambique’s presource curse tragedy — of its ruling elite continuing to borrow and waste money, against the promise of future riches that may never come — continues.
The latest from Zitamar News:
Turkey’s Karpower eyes 415MW oil-fired floating power plant for Maputo
Mozambique's state energy utility EDM and Turkey's Karpower are planning a 415MW oil-fired floating power plant for Maputo - similar but bigger than an existing plant operating in Nacala
From the Zitamar Live Blog:
Balama graphite mine evacuated
Workers are being evacuated from the Balama graphite project, presumably that owned by Syrah Resources, reports Pinnacle News
💥 Conflict updates:
10 November 2022: Nanrapa, Namuno district, Cabo Delgado
At least one person was decapitated this morning in Nanrapa village, Namuno, by a group of insurgents. Homes were also burned and several women and girls were reportedly abducted. The village is 7km from Namuno district headquarters.
10 November 2022: Nguida, Macomia district, Cabo Delgado
Insurgents overran a Mozambican Armed Defence Forces (FADM) garrison and attacked Nguida village, burning houses, looting livestock and abducting civilians. FADM reportedly suffered up to six casualties, including three fatalities.
11 November 2022: Namituri, Namuno district, Cabo Delgado
Namituri village in Namuno was attacked at around midnight by insurgents. Houses were burned. No casualties reported so far.
Also in the news:
Tuna bond repayments currently stand at $138m
Teachers and nurses threaten to strike next week
Sasol eyes hydrogen production to lower carbon footprint
Germany provides Mozambique with €199m financial support
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