"Indication of possible resumption of activities signals that Total has not abandoned gas investment"

“Indicação de eventual retomada de actividades sinaliza que a Total não abandonou o investimento de gás”

The possible resumption, in the next 18 months, of the Liquefied Natural Gas Project, in Cabo Delgado, is seen, in some sectors of public opinion, as a sign that Total has not abandoned its billionaire investment in Mozambique.

The announcement regarding the resumption of this project, interrupted following the Jihadist attack last March 24th on the village of Palma, was made by the President of the African Development Bank, Akinwumi Adesina.

But this prediction is taken as excessive.

Total's project foresees several gains for Mozambique, not only in terms of employment, but also from the point of view of fiscal contribution and for attracting foreign direct investment, and for some currents of opinion, the delay in restarting activities in Afungi, is not a beneficial situation for the country.

Furthermore, this delay will also have very serious implications on the execution schedule of the project itself, and with this delay, all the other variables that were expected for the following years are also compromised.

Uncertainties in the extractive sector

And the fact that the forecast for the resumption of the project is for a year and a half means that uncertainties remain, not only at the level of the extractive sector, but also for the economy in general, since a large part of the budget projections are made taking into account the execution of the Rovuma project.

"In any case, it is already positive to have this indication that the project will be taken, because it was not known whether Total would return or not," said Professor Custódio Dias.

Some economists understand that "this delay has many implications, especially from an economic point of view, because it influences the country's financial rating, since Total's project is one of the largest in Africa; and there are implications with regard to revenue collection and the dynamics of the province of Cabo Delgado, where the project is located, and the country in general."


Others say that a year and a half is too long, especially considering the efforts being made to restore safety conditions, and look at this as a way for Total to force the government to renegotiate the terms of the contract.

Inocencia Mapisse, an economist and researcher at the Center for Public Integrity (CIP), says that the attack on Palma has posed challenges to Total that the company will have to face, "and one of the avenues that these kinds of companies use is to renegotiate the terms of the contract, and the fiscal area has been one of the most affected in those renegotiations."

For economists, in an eventual renegotiation of the contract, the Government should eliminate some of the excessive tax benefits it gives to multinationals, allegedly to attract investors.

Economist João Mosca is a defender of this point of view, and says that Mozambique has good gas reserves, "and, certainly, investors will come with fiscal policies similar to those practiced in other countries.

"You can apply certain levels of fees, as long as it ensures that for the company to pay those fees, it maintains comparative advantages of gas exploration, relative to other sites, because there are more deposits that are not being explored," argued that economist.

Total has not yet pronounced itself on when it might return to Palma, and sociologist João Feijó says that given the circumstances in which it suspended its activities, it is not expected to return soon.

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