Mozambique to become self-reliant due to gas deposits

by Trust Matsilele 0

Italian exploration company, Eni SpA has discovered about 10 trillion cubic feet of natural gas in Mozambique which sparked local interest.

The country’s recent discoveries could see the southern African nation becoming the fourth largest exporter of gas.

About 11 per cent of Mozambique’s gross domestic product is driven by donor aid.

“If gas and coal come online the way we want to see it, the deposits could account for 20 per cent of the country’s GDP,” Ayalenesh Billie Tafesse, country risk analyst at RMB told CNBC Africa.

“It [gas deposits] could change the entire structure of the Mozambican economy to be a little more self-reliant and self-dependent,” she added.

The country has also been in the process of instituting legislative changes as to ensure beneficiation to the country’s struggling populace.

“There has been much outcry from civil society and economic groups that has prompted the government to change the capital gains tax law,” noted Tafesse.

“In terms of overall beneficiation the country is also looking for ways of benefiting from gas deposits besides tax dollars. The country intends building a gas pipeline that will help in easing electricity problems in the country.”

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Tafesse added that the government has been looking at how to put down the final points on how the taxation framework should be structured.

She said, Mozambique also looked at how social surroundings of areas mined would benefit, however expressed doubts that there would be movement especially considering impending polls.

“With elections coming in October this year, I don’t see them putting anything on the table until after elections,” said Tafesse.

The country also introduced the capital gains tax in the extractive sector.

“The capital gains tax on in the extractive sector was put into place at the beginning of this year. Before that this tax was paid on a progressively declining basis.”