Mozambique: Government to resubmit bill on proposed sovereign fund in October

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Mozambique: Government to resubmit bill on proposed sovereign fund in October

8:23 CAT | 28 Sep 2023

File photo: Lusa

Mozambique’s government is going to take draft legislation on the country’s sovereign wealth fund, which is expected to receive $1 billion dollars annually from natural gas revenues, back to parliament in October, in the hope of achieving a consensus on it there.

According to the notice for the eighth ordinary parliamentary session, which is to run from 19 October to 21 December, and which Lusa had access to on Wednesday, the draft law creating the Sovereign Fund of Mozambique (FSM) is one of the 23 items on the agenda.

On 7 August, the governing party, Frelimo, argued in parliament that the bill should be approved by consensus between all parties.

The debate in parliament on the proposal has been postponed several times on the grounds that the document needs to be improved.

“We want a genuinely Mozambican law, and to this end we are working towards consensus on the proposal,” said Feliz Sílvia, the spokesperson for the Frelimo parliamentary party, on 7 August, regarding the withdrawal of the proposal to create the FSM from the agenda of the extraordinary session that was taking place in parliament at the time.

Feliz Sílvia said at the time that Frelimo wants the the main opposition party, Renamo, and the third party, the MDM, to be involved in the future law.

READ: Mozambique: Parliament session set to begin on October 19

The minister of economy and finance, Max Tonela, also said in August, during a parliamentary hearing, that the FSM should collect $1 billion dollars (€947 million) annually in 10 years’ time from natural gas exploration revenues.

“On average, over the 25 years of the [natural gas exploration] concession contract, the Mozambican state will receive 750 million dollars [685 million euros],” explained Tonela, who was questioned in parliament by members of the First Commission on Constitutional Affairs, Human Rights and Legality and the Second Commission on Planning and Budget.

An activist from a civil society platform that is following the process of setting up the FSM told Lusa that the proposal that the government previously laid before parliament does not take on board the recommendation that the planned fund should have a system of governance independent of the executive, through a mechanism of accountability to parliament – meaning that it would remain vulnerable to political influence.

The proposals as they stand also fail to respond to the request of civil society organisations that more than half of the revenues from natural gas exploration should be channelled to the FSM, and not just 40%, as stated in the proposal.

The plan also did not include the suggestion that revenues from the state-owned oil and gas company, Empresa Nacional de Hidrocarbonetos (ENH), be deposited in the fund, nor that its managers be hired by public tender.

Source: Lusa