This EITI Report covers Mozambique's extractive sector in 2017 and 2018. It was published in February 2020.
Expansion of the extractive sector has driven economic growth in recent years, however it is being hit hard by the fall in gas and coal prices. In addition to natural gas and coal, Mozambique has world-class reserves of base metals and gemstones. Petroleum companies and the government are negotiating building an LNG plant in northern Mozambique. In the mining sector, there has been a downturn in the past couple of years. The distribution of benefits from the sector and ensuring that the state’s participation in the sector is managed in a transparent and accountable manner are amongst the debates to which the EITI can contribute.
The legal framework for the petroleum and mining sectors was revised in 2014. The new legislation strengthens state participation in the hydrocarbon sector and creates opportunities for increased Mozambican participation. Foreign investors are required to be registered in a transparent jurisdiction where ownership can be confirmed but the government does not maintain a public register of beneficial owners. The 2014 Report included partial information on beneficial ownership.
Mozambique’s 2013-14 EITI Report requested beneficial ownership from reporting companies, and most companies provided information about legal ownership. Many of the companies in the oil and gas sector are publicly listed. A key challenge will be to cover the mining sector, including details on companies with exploration licenses, small scale mining license holders and companies that bid for licenses.
Mozambique’s production is modest compared to the reserves of gas and minerals. The vast majority of the minerals produced were exported. The value of total production nearly halved in 2014, compared to 2013. Both coal and gas production decreased significantly. Coal accounted for 65% of the value of total extractive production in 2014. The total value of the 1.8 tonnes of coking coal and 1.3 tonnes of thermic coal produced was roughly USD 330 million. Only 86.6 Gj of gas, worth USD 100 million, was produced. The only gas project in production phase is the Pande Temane gas field. The large off-shore fields are still in exploration phase.
Natural gas discoveries off the Mozambican coast are estimated to exceed 160 tcf. Mozambique also has significant reserves of coal, heavy sands, base metals and gemstones.
|Gas||Significant off-shore reserves|
|Coal||Significant reserves. Transport and low prices a challenge.|
Extractive industries accounted for 27% of total government revenue in 2014. The gas sector contributed 90% of the over USD 1 billion total extractives revenue. The largest revenue streams were capital gains tax (71%) and corporate income tax (19%). The value of gas royalties received in kind was USD 5 million. Extractive revenues have increased nearly ten-fold since 2011.
Extractive revenues are recorded in the state budget. The majority of payments are made to the General Tax Directorate. More information about the state agencies that receive revenue is available in section 7.4 of the 2013-2014 EITI Report.
2.75% of extractive revenue is transferred to the communities where gas and mining projects are located. The EITI Report notes that the total amounts transferred in 2014 corresponded to 96% of what should have been transferred. The actual transfers accounted for less than 50% of what was budgeted due to royalty payments not reaching the forecasted level. More information is available in section 7.2 of the report.
Mozambique EITI Reports have highlighted inconsistencies in data collected from the online mining cadastre and other government agencies, which has helped improve data collection and recording. The 2012 Mozambique EITI Report noted that the data from the cadastre was sometimes incomplete or out of date, and companies were inconsistent in their use of tax identification numbers. The solving of these issues has made it easier for the government to monitor payments from individual mining companies.
The national EITI Coordinating Committee has set the following objectives for the EITI in 2016-2018:
Clarifying and communicating the mechanisms for allocating revenue to communities affected by extraction;
Ensuring access to information to enable public participation in the debate on extractives governance;
Improving the accountability mechanisms of institutions and companies in the sector;
Strengthening the role of the EITI Coordinating Committee in ensuring access to information;
Improving transparency of license allocations;
- Contributing to improving the business environment.
The Mozambican EITI Secretariat was established in early 2009 and is currently hosted in the World Bank’s Mining and Gas Technical Assistance Project (MAGTAP) offices in Maputo. The MSG consists of 14 members and 11 alternates with representatives from the government, i.e. the Ministry of Mineral Resources and Energy (MIREME), Ministry of Economy and Finance, Ministry of Land, Environment and Rural Development (MITADE), four private sector companies from both mining and petroleum sectors, four civil society organisations nominated from the CSO platform on extractive industries and two observers (Geological Mining Association of Mozambique and National Syndicate of Journalists). The MSG meets on quarterly basis and is currently chaired by Hon. Ernesto Max Tonela, the Minister of Mineral Resources and Energy.
Mozambique's second Validation against the 2016 Standard commenced on 25 April 2019. Mozambique was found to have achieved meaningful progress, with considerable improvements in implementing the EITI Standard in October 2019.
On 16 October 2019, the EITI Board agreed that Mozambique has made 'meaningful progress' overall, with considerable improvements across individual requirements. Progress in addressing 14 corrective actions will be assessed in a third Validation commencing on 16 April 2021. See Board decision 2019-57/BM-45
In this second Validation, the EITI International Secretariat has assessed the progress made in addressing the 19 corrective actions established by the EITI Board following the first Validation. See more under background below.
The 7th EITI Report for Mozambique which is in accordance with the new EITI International Standard (2016).
This EITI Report covers Mozambique's extractive sector in 2013 and 2014. It was published in December 2015.
This is the Mozambique EITI 2015 Annual Progress Report (in Portuguese), in accordance with Requirements 7.4 and 8.4.
This is the Mozambique EITI 2016-2018 work plan (in accordance with Requirement 1.5).
Based on available documentation and consultations with stakeholders, EITI in Mozambique appears to have had some tangible impacts with regards to bringing issues around transparency on the agenda, building trust between stakeholders and some technical improvements related to revenue management systems. It does however appear that the full potential of Mozambique EITI is yet to be reached, and that the process could be more meaningful and impactful if the government, together with stakeholders, take more ownership of the process and use it to address key challenges of natural resource governance in the country.
- Making extractives data available and placing transparency on the agenda: A government representative stated that with EITI Reports in the public, people now know what is received from the extractive sector in terms of revenue. Several stakeholders explained that the first EITI Report had had significant discrepancies which raised many concerns. With the implementation of EITI, the public now had more access to information, less discrepancies, an online cadastre, contract transparency and more transparent governance of extractive sector. A representative from the Tax Authority explained that the EITI had contributed to fiscal transparency as it could disclose disaggregated data on revenues that the state had not been able to publish. This has provided a basis for fiscal transparency. According to civil society representatives, the EITI has contributed to the establishment of the mining cadastre, progress on contract transparency, publication of contracts, as well as the creation of a specific unit with the Tax Authority to deal with extractive industry issues in general and with EITI in particular.
- Mainstreaming transparency into law: A government representative explained that the requirements in the EITI Standard had been taken into account in the drafting of the 2014 sector laws, and aspects related to transparency had been integrated in the provisions. The Assembly of the Republic introduced some changes in the Mining Law and Petroleum Law that will allow Mozambicans to have periodic information on the revenues collected by the government from oil and mining operations. The new laws require that companies must be listed on the Stock Exchange, which according to civil society stakeholders mean that Mozambicans will have first-hand access to the operations of these companies in the country.
- Technical improvements to revenue management systems: The production of six EITI reports since 2011 has implicitly strengthened government systems over time. Production of the reports have led to better data systems as the reports have pointed to inconsistencies in data collected from the mining cadastre and the General Taxation Directorate (DGI) as well as to incomplete information, which initially prevented adequate reconciliation of revenues. During the early years, there were significant problems with companies not reporting under their individual Tax Identification Numbers (NUIT), but rather entering the MIREME’s NUIT on their reporting templates, making reconciliation of company payments and government receipts practically impossible, as companies could not be distinguished from each other. As this problem has been resolved over time, the government is now able to track extractive revenue by individual company.
A government representative explained that the EITI reporting process had helped identify some technical challenges with regards to collection and verification of company data to help inform the basis for company payments. For example, MIREME provides the data on size of license areas that companies report to the Tax Authority for the calculation of surface rent. The reporting process also highlighted issues to address that would require improved inter-agency cooperation, such as how to deal with companies headquartered in Maputo but with activities in another province. These issues had been partially addressed by the improved license cadastre and more regular inter-agency discussions resulting from the EITI reporting process.
Additionally, several recommendations from the EITI Reports are being implemented to (i) improve the effectiveness and completeness of data recording between the Mining Cadaster and the Tax Authority; (ii) implement accurate recordings of payments by companies at the Tax Authority in the provinces and the Tax Authority at the central level, so that cross checking of information is automatic; and (iii) to improve oversight by MIREME of concession transfers and the proper documentation of such transactions, which would allow collection taxes applicable to such transfers.
- Bringing stakeholders together and building trust: Initially, the Mozambique EITI process was primarily led by the government, with civil society playing only a minor role. To increase their influence, the three CSOs represented in the MSG – the Institute for Social and Economic Research (IESE), CIP, and Youth Kuwuka JDA - supported the creation of an extractive industries CSO platform, which now comprises 40 organizations and allowing stakeholders beyond MSG to provide feedback on the EITI process. The platform has been vocal in pushing for enhanced impacts of Mozambique EITI by ensuring that transparency in extractive industries goes beyond the revenue figures to focus on promoting efficient management of resources and enhancing public dialogue around the extractive industries. The Mozambique EITI has become a platform for all three MSG member groups to discuss issues that go beyond just the revenue numbers, e.g., the MSG meetings have fruitfully covered topics related to revenue sharing formulas with local communities, resettlement issues, and contract transparency that have fed into higher level policy discussions in the country. A member of parliament explained that EITI had impact by bringing all stakeholders to the same table, creating space for dialogue of the management of extractive sector. This view was confirmed by a private sector stakeholder.