The President of Mozambique promulgates the law establishing the Mozambican Sovereign Fund

The President of Mozambique, Filipe Nyusi, promulgated the law establishing the Sovereign Fund of Mozambique (MSF), approved in December in Parliament, the Presidency of the Republic announced this Monday.

A statement from the President of the Republic said that the head of state “adopted and ordered the publication” of a law establishing this fund, which will be financed from revenues received from the export of natural gas.

“The above-mentioned Law was recently approved by the Assembly of the Republic and submitted to the President of the Republic for promulgation, and the head of state checked whether it does not contradict the Basic Law,” the statement said.

On December 15, the Mozambican parliament gave final approval to the creation of the FSM, with natural gas exploration revenues expected to reach $6 billion a year in the 2040s, despite widespread criticism from the opposition who question how much control will be handed over to the FSM . to him.

The proposal to create the FSM, presented by the government, received 165 votes in favor only from the Mozambican Liberation Front (Frelimo), while 39 opposition MPs from the Mozambican National Resistance (Renamo) and the Mozambican Democratic Movement (MDM) voted against.

“Forecasts indicate that annual gas exports could reach about 91.7 billion nominal dollars over the life of the project, in a scenario in which all development initiatives approved by the government to date are in operation. In this scenario, annual government revenues would peak in the 2040s at more than $6 billion per year,” explained Economy and Finance Minister Max Tonela, speaking in parliament at the time.

The creation of the fund was discussed for several months, with the government repeatedly withdrawing the proposal from discussion in the National Assembly, citing an attempt to achieve consensus on its approval, which did not happen.

In the model for the creation of the FSM, of which the Bank of Mozambique will be the operational manager, Max Tonela said that it took into account “successful examples in the world and less successful cases” in which “countries that had great resources and were willing to meet them got into too much debt, and at this point the level of resources decreases and they enter into a conflict in which they do not have the opportunity to have more resources.”

“So that is the ultimate goal of the foundation. That is why we must look at current generations, but ensure that future generations can also take advantage of the availability of resources that exist in the country,” he explained, emphasizing that the FSM will allow “to find resources to finance the state budget in a situation where there is no longer a natural gas” for exploration.

The preamble to the proposed law establishing the FSM, to which Lusa had access, states that exploration activities carried out in zones 1 and 4, “offshore” the Rovuma block, “have discovered vast deposits of oil and unbound natural gas,” estimated at approximately at 180 trillion cubic feet.

In this context, the operators and partners of Regions 1 and 4 presented to the Government three already approved natural gas liquefaction projects, namely the Coral Sul FLNG Offshore LNG Project, the Golfigno/Tuna LNG Project and the Rovuma LNG Liquefied Natural Gas gas.

At the same time, exploration work is underway at five oil and gas exploration and production concessions located in Angocha, Zambezi Delta, “expecting even greater benefits if commercially discovered.”

FSM’s revenues come from liquefied natural gas production in Areas 1 and 4, offshore the Rovuma Basin and future oil and natural gas development and production projects, as well as the fund’s “investment earnings income.”