Mozambique: Nyusi warns against exaggerated gas expectations

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Mozambique: Nyusi warns against exaggerated gas expectations

9:35 CAT | 25 Oct 2022

Image: Domingo

Mozambican President Filipe Nyusi has warned against exaggerated expectations of the revenue that will be generated by liquefied natural gas (LNG) from the gas fields in the Rovuma Basin, off the coast of the northern province of Cabo Delgado.

At a meeting in the southern province of Inhambane, with newly elected members of the Central Committee of the ruling Frelimo Party, reported in Monday’s issue of the independent newssheet “Mediafax”, Nyusi warned that the revenue expected from LNG between now and 2024 will not even be enough for the full rehabilitation of the main north-south highway (EN1).

READ: Mozambique: Rovuma gas expected to be 0.3% of total 2023 state revenue

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“This is a problem that must be understood, comrades”, said Nyusi. “The gas from the Coral South Floating LNG Project is not even enough to repair the EN1. What we will receive, if we are lucky, is no more than 30 million dollars this year”.

Gas revenue in 2023 and 2024 will be higher, but Nyusi put it at no more than 100 million dollars a year. If we obtain 100 million dollars a year, that will be very good”, he said, “but that may not always happen”.

So the President urged his listeners not to place all their hopes in LNG. “It’s not even enough to fix the road from here in Inhambane to Maputo”, he said

Nor was it true that the planned Sovereign Wealth Fund would miraculously produce a flood of money for the state budget. The only way forward, Nyusi insisted, was to diversify the Mozambican economy. “If we don’t, we shall be killing ourselves in vain here for something which is not as big as we imagine”.

Revenue collection for 2023 is projected at 350 billion meticais (about 5.5 billion US dollars), but only 0.3 per cent of this will come from LNG.

Nyusi warned that it will be another ten years before really large sums from LNG start flowing into the state’s coffers. The only Rovuma Basin LNG project now in production is the smallest one – the floating LNG platform built in a Korean shipyard and towed to the Mozambique Channel.

Much larger onshore LNG projects are planned for the Afungi peninsula in Palma district – but can only resume once the security situation in Cabo Delgado improves. The French company TotalEnergies has made it clear that LNG production in Afungi is dependent on security conditions.

The forecast is that the Coral South LNG floating platform will produce 19 billion US dollars in revenue over the next 25 years.

READ: Mozambique: State Budget draft forecasts 23.1% growth in extractive sector for 2023

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Source: AIM