Mozambique: Financial restructuring generates more revenue for the state in Area 1

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Mozambique: Financial restructuring generates more revenue for the state in Area 1

3:05 CAT | 27 May 2020

Filimão Swaze. [Photo: O País]

The Council of Ministers yesterday approved the Decree (51/2019) amending the Financing Structure of the Liquefied Natural Gas Dolphin and Tuna Project, in order to give the project a better framework.

One of the objectives of the review is to allow the inclusion of the French multinational Total E&P Mozambique Area 1 into the shareholder structure, replacing its North American counterpart, Anadarko, which is no longer part of the group due to the sale of its stake.

According to Minister of Mineral Resources and Energy, Max Tonela, this review “also aims to create conditions for flexibility with regard to the development of related projects”.

According to the terms of the structure and commitments approved last year, under the Final Investment Decision (FID), concessionaires could only develop the project’s subsequent steps from 2026. But the entry of Total changes the scenario, both in terms of schedule and in terms of revenue for shareholders.

“With the entry of Total, an exercise in financing optimisation was carried out, which creates conditions for the survey process to present the second onshore project in Area 1 to take place still in the current term of office” Tonela explained, speaking right after the 18th ordinary session of the Council of Ministers.

The optimisation process allowed a financial restructuring with a positive impact in all areas, Tonela revealed.

“This financing optimisation exercise also allowed the reduction of financing costs in terms of interest, in the order of USD 1.1 billion during the construction phase and USD 700 million, during the operation phase, which will allow that all interested parties, including the Mozambican state, will have associated gains,” Tonela detailed, revealing that “the value that the Mozambican state will receive from the project will increase by one million dollars”.

Impact of COVID-19

At a time when the world in general and the country in particular are affected by the Covid-19 pandemic, Tonela spoke of the impact on the Area 1 project.

“We found ways to mitigate [the effect]. In terms of engineering work, they are running as scheduled. It has had some impact on procurement issues, but they are recoverable impacts and do not jeopardize the overall project programme,” he explained.

“In terms of the contract, there was this interruption due to the Covid -19 cases in Afungi, but work is under way to disinfect the fields and we expect that by the end of the month it will be declared free from Covid-19, allowing the re-mobilisation of workers process to start.”

Government moves towards the creation of the Asset Recovery Law

The Government yesterday took the first steps towards creating legislation aimed at recovering, in favour of the State, assets and goods resulting from criminal activities in the country.

In this sense, at its 18th ordinary session, the Council of Ministers “considered the Law that establishes the legal regime that has long been claimed by the Attorney General’s Office (PGR), which will allow, in addition to prison sentences, that the State seize assets and goods resulting from criminal action, namely money laundering, drug trafficking, corruption, among others.

The project, which will soon be submitted to parliament for approval, “aims to ensure more consistent, balanced and effective normative solutions that develop institutional and organizational mechanisms for detention and recovery, in favour of the State, of assets or products related to illicit activities ” explained the spokesman for the Council of Ministers at the end of this Tuesday’s session.

The instrument, which has been claimed by the PGR, aims to expand punitive legal measures against all criminal offences. Recently, in a press interview, PGR spokesman Bernardo Duce justified the imperative of having this legislation approved saying that “crime cannot be allowed to be a source of enrichment, the law aims to confer powers so that the state can withdraw from the offender all the benefits resulting from or achieved through the unlawful fact, either to compensate the victims, to compensate the State, or to cancel the favours of the crime ”, he explained.

It should be noted that the foundations of the proposal considered yesterday by the Council of Ministers were created by the PGR, which took into account the United Nations Convention against Corruption.

By William Mapote

Source: O País