Early this week, US energy firm Anadarko Petroleum gave the go ahead for the construction of a $20bn gas liquefaction and export terminal in Mozambique.
Although the gas construction could double Mozambique’s GDP there are some disastrous consequences that may be faced by the country.
It was reported that the $20 billion gas investment which will be taken over by Occidental Petroleum Corp will be sold off along with Mozambique LNG project to French oil major Total SA.
At present, experts are afraid that Mozambique will follow the same order as Angola, Equatorial Guinea and Nigeria that did not benefit much from gas production.
Analyst at African Risk Consultant, Shawn Duthie said: “Our forecast is that is Mozambique’s economy will benefit from its LNG resource, but it will be less than expected and will come later than everyone is forecasting.
“The government’s massive borrowing spree ahead of any actual production (along with the hidden debt from the previous government) has put the country in a negative position ahead of production, which is slated to begin 2022 at earliest.
“However, Mozambique will be collecting only royalty payments at this stage and taxable revenue from companies is only expected in the 2030s, once the companies have recovered their initial expenditure.”
“I think, unfortunately, that Mozambique’s gas story will be similar to Nigeria, Angola, DRC, there will be a lot of money coming in from its natural resources, but poor planning, poor governance, poor institutions and a massive amount of debt means that the average Mozambican will not see much improvement in their quality of life from the gas find,” added Duthie.
Koketso Ramorei is a journalist and news editor of SADC News with years of experience in a number of genres including sports, politics and community reporting. He has worked for a numerous publications including The Citizen Newspaper and is a former editor of a Johannesburg-based off-campus publication called The Waldorfian Times.