Billion-dollar LNG project

A final investment decision on a $3.15 billion (£2.46 billion) liquefied natural gas (LNG) project near Mozambique’s capital will be taken around the middle of 2020, France’s Total and its partners in the project said on Wednesday.The project will see a floating storage and regasification unit moored in the harbour of Matola, a suburb of the capital Maputo, and it will be connected to a new gas-fired power plant nearby and to South Africa’s gas network. Total will supply the gas. Total and its partners, including Gigajoule, a gas company focused on southern Africa, and Mozambique’s Matola Gas Company (MCG), which operates a 100 kilometre gas pipeline network in Maputo province, signed an agreement to develop the project on Wednesday.

“[This] will accelerate the process which will enable a final investment decision to be taken by the middle of 2020,” the joint statement said, adding construction would then proceed and commercial operations would commence by the end of that year.

“The availability of a new source of much needed natural gas and power will fuel the economic growth in Mozambique and the southern African region.”

Mozambique is on the cusp of a gas boom as blockbuster projects by the likes of oil majors including Total and Exxon Mobil get underway in its gas-rich north.While this separate project is situated at the opposite end of the country, it shows how one of the world’s most impoverished nations is working to leverage unprecedented inflows of foreign direct investment in order to develop.The statement said the gas pipeline network, harbour infrastructure and a connection to South Africa’s network will cost around $350 million, while the cost of the 2,000 megawatt power plant, which will be constructed in phases as the market develops, will be around $2.8 billion.Total, Gigajoule and MGC signed a memorandum of understanding related to the project in 2017. Concessions for the development and construction of the gas infrastructure and for the design, construction and operation for the power station were awarded in July.

Four injured

Four people were injured in an armed attack on a Transportadora Etrago bus registered in the Gondola district of Manica at around 6:00 a.m. today, Friday.

One is in a serious condition, and the three others suffered minor injuries. The attack took place in the vicinity of Muda Serração, about 75 kilometres from the city of Chimoio. The target was an Etrago Company bus on the Maputo-Quelimane route. A hospital source in Gondola district said that four people were injured, one of them seriously, but stressed that hospital staff were not authorised to give interviews, and victims were not to be approached. Our reporter was prevented from taking pictures inside the Gondola district hospital, where a security detail was mounted at the emergency room door to prevent images being captured. The seriously injured victim was transferred to Chimoio Provincial Hospital in a municipal ambulance at around 11:30 a.m. today.

Former bread and fuel subsidies benefited the wealthy

General subsidies are expensive and benefit the wealthy, the International Monetary Fund (IMF) explains. The resident representative of the institution in Mozambique points out that, under the former subsidies policies, there were people of wealth in the country whose lunches were paid for by the public treasury. The IMF explanation comes more than two years after the government axed its bread and fuel subsidies. According to the International Monetary Fund, these subsidies penalised those who actually needed them.

“General subsidies are not good. They are expensive and benefit wealthier people. Good subsidies are those that really go to the people who need them. It was not the case of either the fuel or the bread [subsidy]. For the flour subsidy, which was eliminated, there were people with high purchasing power whose breakfasts were being funded by public resources,” IMF Resident Representative in Mozambique Ari Aisen explains. The International Monetary Fund also thinks that the current price of fuel, as determined by market rules, has prevented imbalances in supply and brought more strength to the national economy.

 “The risk is that when the supply of fuel from gas stations is threatened, then you enter dangerous territory because the very economic activity that needs that input may be compromised. This risk to economic activity has been eliminated. Today, the problem of all gas stations has been solved through the price of fuels. Today, the pending issues of gas stations and the fuel supply to gas stations has been normalized, and there are no risks,” Aisen says.

Oldemiro Belchior, chief economist of Millennium bim, and another of the speakers at the IMF event in Maputo, argues that subsidy cuts have also benefited the Mozambican state.

“It was a liquidity absorbed in the budgetary accounts without reason, justification or plausible return for its application. Releasing this liquidity and allocating it to more productive and profitable sectors of the economy in fact creates some muscle, some availability for the state, reducing the deficit and even making the company which [previously] benefited [from subsidies] more profitable,” Belchior explained. These propositions were presented in Maputo on Monday, at an event organised by the International Monetary Fund which brought together representatives of the public and private sectors for the IMF’s Sub-Saharan Africa and Mozambique Regional Economic Outlook Presentation.