Mozambique: Opposition denounce lack of transparency in sovereign fund

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Mozambique: Opposition denounce lack of transparency in sovereign fund

6:59 CAT | 17 Dec 2023

File photo: Noticias

Mozambique’s opposition political parties argued in parliament that the Mozambique Sovereign Fund approved definitively today is incomplete and lacks transparency, while Frelimo, the ruling party, believes that the instrument will stabilise the economy.

“The parliamentary caucus of the Democratic Movement of Mozambique (MDM) voted against because the proposal doesn’t guarantee the Fund’s transparency (…) What’s more, the government doesn’t know how much money will be needed to materialise the national development strategy,” said Fernando Bismarque, a member of the MDM, the country’s third largest parliamentary political force, during the session.

For the MDM, although necessary, one of the limitations of the instrument approved today is linked to the model that will be adopted for hiring external managers, which does not provide for public tenders.

“The proposal gives the operational manager, in this case, the Bank of Mozambique, the power to hire external managers without an international public tender, opening up space for nepotism, patronage and the risk of hiring managers with a history of corruption,” said the MP, who also accused the central bank of being “not very transparent”.

The Mozambican National Resistance (Renamo), the main opposition party, also believes that the instrument lacks transparency, although it also admits that the mechanism is necessary.

“This fund, which is imposed on us, is only limited to mineral resources or hydrocarbons in the province of Cabo Delgado, specifically in the Rovuma basin. If Katembe or Buzi were to have oil tomorrow, the revenues would not be part of this fund,” said Alfredo Magumisse, a Renamo MP.

As well as considering the proposal to lack transparency, the main opposition party in Mozambique believes that the mechanism excludes various segments of Mozambican society.

“Renamo and the Mozambican people advocated the creation of a high authority that would allow the integration of all sectors or all the living forces of society, namely the private sector, democratically elected members of the Assembly of the Republic and the government itself, who would participate on a daily basis in the direct management of revenues,” said the Renamo MP.

The Mozambique Liberation Front (Frelimo), for its part, believes that the approved proposal will “maximise” the benefits of gas exploration, classifying it as “rational” for the management of gas revenues.

“We voted in favour because this bill stabilises the state budget in the event of oil company volatility, accumulating savings for future generations,” said Mário Amaral, a ruling party MP, adding that it is an “appropriate operational model that ensures transparency and sustainable revenue management”.

The Mozambican parliament on Friday gave final approval to the creation of the Mozambique Sovereign Fund with revenues from natural gas exploration, which by the 2040s should reach $6 billion a year.

The proposal to create the MSF, presented by the government, received 165 votes in favour from Frelimo alone, while 39 opposition MPs voted against.

The draft law creating the MSF, to which Lusa had access, states in the preamble that as part of the research activities carried out in Areas 1 and 4, offshore of the Rovuma block, “huge deposits of oil and non-associated natural gas” were discovered, estimated at around 180 trillion cubic feet.

In this context, the operators and partners in Areas 1 and 4 submitted three natural gas liquefaction projects to the government, which have already been approved, namely the Coral Sul Liquefied Natural Gas FLNG, offshore, the Golfinho/Atum Liquefied Natural Gas and the Rovuma LNG.

Source: Lusa