MOZAMBIQUE’S new government, appointed January 17 by President Filipe Nyusi, features an enlarged energy ministry as the Southern African country strives to transform its economy by developing natural-gas discoveries.
Former deputy finance minister Pedro Couto heads up an energy ministry that now includes the mineral resources portfolio. He must oversee the export of electricity production from the Cahora Bassa 2 000-megawatt hydroelectric power plant, the award of new oil and gas licences and seek new markets for Mozambican coal.
Couto is “very professional, very technocratic,” Peter Heilner, managing director of Sub-Saharan Africa-focused investment bank Civitas Partners, said by e-mail from Johannesburg.
Mozambique may be among the world’s largest exporters of liquefied natural gas by the middle of the next decade, according to the International Energy Agency. The country is currently among the continent’s poorest nations, with 61 percent of the population living on US$1,25 a day, compared with an average of 47 percent across Sub-Saharan Africa, according to the World Bank.
The government last month published a law enabling groups led by Anadarko Petroleum Corp and Eni SpA (ENI) to proceed with multi-billion-dollar investments in gas. The companies were given six months to submit a joint plan on how to develop the reserves in the Rovuma Basin in the Indian Ocean.
Couto “is well regarded and as an outsider to the sector may be more effective, making up for his lack of energy experience”, said Colin Waugh, partner at Maputo-based investment firm SCP Africa.
The new minister comes to the post “with a reasonable reputation”, Ann Fruhauf of Teneo Intelligence said in e-mailed comments.
Couto may promote transparency and continue predecessor Esperanca Bias’s “tough but fair” approach on resources, she said.
Couto’s task may prove demanding, given that the government had previously considered splitting the old mineral resources ministry between petroleum and mining, to cope with the growth in oil and gas exploration, Fruhauf said.
Nyusi has meshed the old finance ministry with planning and development to form an economy and finance portfolio under former central bank governor Adriano Maleiane. The new government will be led by Prime Minister Carlos do Rosario, a former minister of agriculture, who was ambassador to India, Indonesia and Malaysia.
Its most immediate challenge is dealing with floods that have killed more than 70 and forced 80 000 from their homes. The severe weather has also cut four provinces from the national power grid, a link not expected to be restored for two weeks. Nyusi won the presidency in October 15 elections that saw his Front for the Liberation of Mozambique, or Frelimo, retain its parliamentary majority.
The opposition Mozambique National Resistance, or Renamo, continues to dispute the result and has threatened to declare a breakaway republic. Nyusi’s cabinet may fall short of some expectations that it would include more influences from outside the ruling party, Fernando Lima, a journalist and founder of independent weekly newspaper Savana, said by phone from Maputo.
The government “does not contain a lot of independent people”, he said. “It’s a Frelimo government with a greater accent on technical competence.”
Meanwhile, a report carried out by Ventures Africa quoting the World Bank claims that Mozambique holds the largest natural gas deposits in Sub-Saharan Africa with over 20 billion barrels reserved in its deep waters.
“Natural gas fields in the deep waters of Mozambique have reserves higher than in Angola or Nigeria, the two largest oil producers in Sub-Saharan Africa,” said the World Bank in its latest report Global Economic Prospects report, issued on January 13 in Washington.
The report also added that Sub-Saharan Africa grew moderately in 2014, at an average of 4,5 percent, compared with 4,2 percent in 2013.
The reasons for the slowdown in the region, according to the report, are related to “the decline in global demand, low prices of raw materials, weak foreign direct investment, low business confidence, poor skills, particularly in terms of infrastructure along with the Ebola epidemic and the sharp decline in oil prices.”
The IMF recently explained that natural gas production could potentially boost Mozambique’s growth rate by 2 percent annually. Aside gas, coal has proven another useful treasure to Mozambique. In 2012, it surpassed Zimbabwe to become the second-largest coal producer in Africa, only behind South Africa. Nonetheless, Mozambique’s coal production is equivalent to less than 2 percent of South Africa’s coal production. — Bloomberg.