CIP apprehensive about Mozambique mortgaging future gas revenues

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CIP apprehensive about Mozambique mortgaging future gas revenues

1:50 CAT | 22 Aug 2018

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Mozambique’s sovereign debt creditors have proposed that the government pay US$200 million off by 2023, from then on receiving the remainder from gas revenues.

But the Public Integrity Centre (CIP), a Mozambican civil society organisation, warned on Monday that the government effectively intended to mortgage future gas revenues instead of holding the perpetrators of the hidden debts to account.

According to the CIP statement, the government “has not yet made public pronouncements” on the proposed restructuring, and as such “creates uncertainty”. The CIP “draws attention to the steps that must be taken in order to clarify how gas revenues should be used”.

A source close to the negotiations told Lusa that the creditors’ proposal, recently submitted to the finance minister, was that the government would not have to pay 80 percent of the amount provided for in the original agreement until 2023.

‘The proposal offers a substantial financial liquidity relief until 2023, which corresponds to the period in which this relief was requested,” the source explains, adding that Mozambique would escape paying almost one billion dollars (860 million Euros) over the next five years, which corresponds to 80 percent of debt servicing until maturity of the securities in 2023.

According to the statement released on Monday, the CIP draws attention to the steps that must be taken in order to clarify how gas revenues should be used in response to any proposal made by creditors.

In this regard, the CIP urged the government “to improve its communication”, in a context in which “even after receiving the proposal from the creditors, the Mozambican people still do not know the reaction of the executive or of the legislature”.

According to article 37 of the Oil Law (Law 21/2014 August 18 – Capitalisation of revenues), cited in the CIP communique, “it is for the Assembly of the Republic to define a mechanism for the sustainable and transparent management of revenues from exploitation of the country’s oil resources, taking into account the satisfaction of present needs and those of future generations”.

The CIP urges the legislature to rule on any debt restructuring involving resources from the oil sector and calls for the parliament to establish criteria for the use of gas revenues to safeguard transparency and accountability before any proposed restructuring is approved.

Source: Lusa