Mozambique publishes proposed model for sovereign wealth fund
Mozambique is preparing to reap as much as $96bn from liquefied natural gas projects that companies including Total are building
Maputo — Mozambique published its proposed model for a sovereign wealth fund as it prepares to reap as much as $96bn — more than six times the size of its current GDP — from liquefied natural gas projects that companies including Total are building.
The developments, which are the biggest private investments yet in Africa, could make Mozambique the continent’s second-biggest producer of the fuel. The central bank laid out plans for how the fund may function and which institutions it will report to. The proposal anticipates that the $96bn will accumulate over the lifetime of the projects.
The fund will build up savings and contribute to fiscal stability when commodity prices fluctuate, according to the document published on the Bank of Mozambique’s website on Monday. Legislators would regulate the fund with the ministry of economy and finance managing it. The central bank will manage the fund’s operations and implement its investment policy.
The government will need to deal with escalating violence in the northern Cabo Delgado province where the projects are located before it enjoys the full benefits. Fighters linked to Islamic State (IS) in August seized the port town of Mocimboa da Praia — about 60km south of where Total is spending $20bn on its project. It’s not clear when the state will regain control.
The final proposal will be sent to the government after considering public comments. The southeast African nation plans to have it operating before revenue from LNG starts to flow, with first production due in 2022 from the smallest of the three projects planned.
Bloomberg