The Ministry of Economy and Finance (MEF) has said that it has already completed all the instruments needed to operationalise the Mozambique Sovereign Fund (FSM) this month, which will be financed with revenues from gas exploration projects.
“From the outset, everything is in place to meet the dates. We still have April on the horizon, barring any mishaps that may occur from the point of view of the formalisation processes,” said Enilde Sarmento, the MEF’s national director of Development Studies and Policies.
Quoted on Tuesday (2) by Lusa, she explained that two of the three main instruments that were missing to make the WSF operational have already been finalised. These are the Management Agreement, which will be signed between the government and the governor of the central bank, and the Investment Policy.
“We have now finalised the Investment Policy and the Management Agreement. We are now going to proceed to the forums for appraisal and approval, at the level of the Council of Ministers, and then proceed to the signatures between the government and the Bank of Mozambique, which has the mandate to manage the FSM,” she clarified.
At the same time, she pointed out that other processes are being finalised, such as the setting up of two committees: the Investment Advisory Council, whose seven members will be appointed by the government, and the Supervisory Committee, with members from civil society and which is the responsibility of Parliament.
In March, the Executive approved the decree regulating the Sovereign Fund Law, establishing a legal framework for the management of revenues from the country’s oil and natural gas exploitation
The document defines the procedures for ensuring the transfer of resources associated with the exploitation of liquefied natural gas (LNG), as well as revenues from the exploitation of future oil and gas projects, setting a proportion of 60 per cent for the State Budget (OE) and 40 per cent for the Sovereign Fund account, for the first 15 years, with a 50-50 split from the 16th onwards.
Last year, Parliament approved the proposal to create the WSF, which received 165 votes in favour from the Mozambique Liberation Front (Frelimo) in the final vote, while 39 opposition MPs [Mozambican National Resistance (Renamo) and the Mozambique Democratic Movement (MDM)] voted against.
“Projections indicate that annual gas exports could amount to a nominal 91.7 billion dollars over the life cycle of the project, in a scenario where all the development initiatives approved by the government so far are in operation. In this context, annual revenues for the state will peak in the 2040s at more than 6 billion dollars a year,” explained the Minister of Economy and Finance, Max Tonela, at the time.
The fund will have Banco de Moçambique as its operational manager and will be made up of revenues from the production of liquefied natural gas from areas 1 and 4, offshore in the Rovuma basin, from future oil and natural gas development and production projects, as well as from the “return on investment from the revenues” from the fund.
