- Mozambique does not agree with the invoice for 4.5 billion US dollars submitted by TotalEnergies
- The resumption of the project, with an investment of about 20 billion dollars, is seen as lifting the economy of one of the poorest countries in the world
By MOZTIMES
Maputo (MOZTIMES) – The Mozambique LNG project remains formally paralysed, pending approval of the addendum to the development plan, which is crucial for determining the updated project cost and the duration of the exploration and production concession contract.
This Tuesday, the Council of Ministers announced that it has approved a resolution requiring an audit of the costs incurred by TotalEnergies, which holds the project concession, during the four and a half years when the declaration of force majeure was in effect.
Only after the audit has been concluded will the addendum to the development plan be approved, and the project will then be formally resumed.
“The resolution determines the holding and validation by the Government of an audit of the costs incurred during the period of force majeure, for later approval of the Addendum to the Project’s Development Plan”, says the release distributed to journalists after the meeting of the Council of Ministers on Tuesday.
Last week, President Daniel Chapo declared that “if all goes well, in about a week’s time from now, at most, we shall conclude the talks with the project headed by Total, so that we can resume”.
The new announcement of the need for an audit means that the talks with TotalEnergies have not yet been concluded.
The main point of disagreement lies in the sum of $ 4.5 billion, which TotalEnergies claims it spent during the period of force majeure and which it seeks to have added to the cost of the investment. This means that it will be deducted from future gas revenue produced in the Rovuma Basin, and hence from the State’s fiscal revenues.
TotalEnergies also seeks to extend the duration of the exploration and production concession contract by a further ten years, to compensate for the four and a half years during which the project was halted.
In a letter addressed to President Chapo, the company announced the lifting of the state of force majeure, stating that the “full relaunch of the project” would be conditional on approval by the Government of the revised project cost and the new schedule. “As a final step before fully relaunching the project, the Mozambique LNG Concessionaire looks forward to receiving the approval by the Government of Mozambique of the revised project cost and schedule, as submitted to the Ministry of Energy...”, the letter said.
The Government expressed its displeasure at the demands made by TotalEnergies. Speaking at a business forum in Maputo last week, President Daniel Chapo said he is negotiating conditions that would be more beneficial for the country.
“We are working to close the points that we think are important for the benefit of both the Mozambican people and the investors, so that we can resume the project”, declared Presidente Chapo.
The Mozambique LNG project was paralysed in March 2021 due to the terrorist threat after a major attack by the jihadist insurgents linked to the Islamic State. The attack occurred in the town of Palma, approximately 10 kilometres from the project camp. However, its resumption is now conditional on contractual issues, rather than security concerns, since security has been re-established in the region with the support of the Rwanda Defence Force.
With a total investment estimated at $ 20 billion, the Mozambique LNG Project is viewed with great expectation as it leverages the economy of one of the poorest countries in the world, which is currently undergoing a financial crisis that has raised domestic indebtedness to unsustainable levels. According to the International Monetary Fund, Mozambique is spending about 93% of its fiscal revenues on wages and debt servicing. (MT)
