This Friday, 5 July, the Mozambican President expressed his intention to draw on East Timor’s experience in managing the Sovereign Fund, made up of funds from the exploitation of mineral resources.
“On our side (in the talks), my concern has always been along the lines of the Sovereign Fund. Knowing that my brother has already had experience of how it works and how it is exploited, especially through contracts, we want to know how they have prepared themselves”, declared Filipe Nyusi, moments after a meeting with the Timorese head of state, as part of the working visit that José Ramos-Horta is making to the country until Sunday.
According to the Lusa news agency, on 15 December Parliament approved the creation of the Sovereign Fund with revenues from natural gas exploration which, by the 2040s, should reach 379.2 billion meticals (6 billion dollars) a year.
The organisation says that the government plans to transfer an average of 2.1 billion meticals (30.7 million euros) to the Mozambique Sovereign Fund (FSM) every year until 2027, as provided for in the Medium-Term Fiscal Scenario.
The country has the third largest natural gas reserves in Africa, estimated at 180 million cubic feet.
On the occasion, Filipe Nyusi insisted that the sustainable management of the fund also depends on the experience that the country should gain from nations like East Timor, a country with “muscle” in the management of mineral resources.
The head of state therefore highlighted the signing on Friday (5) of co-operation instruments that provide for this interaction as an important step. “The Timorese already have enough muscle to dominate the gas or hydrocarbon business in their country. For example, one of the issues we can discuss (I believe they must have had a case) is the delays in starting exploration. As such, we want to know how they solved this problem,” emphasised Filipe Nyusi.
José Ramos-Horta, for his part, recalled that East Timor started its Sovereign Fund with just over 12.6 billion meticals (200 million dollars) in 2005, and today the country has around 1.2 trillion meticals (20 billion dollars).
“Today we have around 1.2 trillion meticals (20 billion dollars) in the Sovereign Fund, but we would be at 1.8 trillion meticals (30 billion dollars). We withdrew between 632 and 948 billion meticals (10 to 15 billion dollars) for the General State Budget, investing in roads, the new Port of Dili and electrification,” declared the Timorese head of state. Ramos Horta also emphasised that the management of the fund is based on parliamentary discussions and that the Executive has no power over the funds.
The government has already completed all the necessary instruments to make the Sovereign Fund operational, which will be financed with revenues from gas exploration projects, the national director of Development Studies and Policies at the Ministry of Economy and Finance told Lusa on 2 April.
Mozambique has three development projects approved to exploit the natural gas reserves in the Rovuma basin, classified among the largest in the world, off the coast of Cabo Delgado.
Two of these projects are larger and involve channelling the gas from the seabed to land, cooling it in a plant to export it by sea in a liquid state. One is led by TotalEnergies (the Area 1 consortium), and progress was made until it was suspended indefinitely following an armed attack on Palma in March 2021, when the French energy company declared that it would only resume work when the area was safe. The other is the investment, still unannounced, led by ExxonMobil and Eni (Area 4 consortium).
A third completed, smaller project also belongs to the Area 4 consortium and consists of a floating platform to capture and process gas for export, directly at sea, which started up in November 2022.
