Mozambique 2017-2018 EITI Report
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. 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. Mozambique's latest EITI report covers Mozambique's extractive sector in 2017 and 2018. It was published in February 2020
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.
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 remains modest compared to the reserves of gas and minerals. Coal production in 2018 was 15.2million tons, up from 11.7 million tons in 2017 earning 54,757,204,357 and 127,287,473,304 respectively. The only gas project in production phase is the Pande Temane gas field. Gas production only registered only a marginal increase with 192.4 and 192.7 million gigajoules (GJ) for 2017 and 2018, respectively, the equivalent of 11.96 and 11.99 billion MT (USD160 m) large off-shore fields are still in exploration phase although the Mozambique LNG project reached final investment decision in 2019.
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.
Commodity | Reserves | Unit | Significance |
---|---|---|---|
Gas | Significant off-shore reserves | ||
Coal | Significant reserves. Transport and low prices a challenge. | ||
Iron-vanadium | |||
Niobium | |||
Titunium | |||
Zirconium | |||
Gold | |||
Graphite | |||
Rubies | |||
Phosphate Rock |
According to the latest EITI report, extractive industries contribution to government revenue amounted to 35.426,09 million MT (about USD509m) in 2017 and 19.071,27 million MT (about USD274m), which corresponds to 17% and 9% of the total revenue collected during those years. The drop in revenue, according to the report, is due to the fact that a large portion of the revenue in 2017 was accrued from capital gains tax.
Initializing chart.
Extractive revenues are recorded in the state budget. The law provides for a percentage of extractive revenues to be transferred to communities where gas and mining projects are located. The percentage that is allocated is determined during the budgeting process and is currently benchmarked on revenue received in the 2 years prior. Details on the transfers to subnational levels are covered in Section 10 of Mozambique's 2017-2018 EITI 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 2017-2018 Mozambique EITI Report noted that there is need to have a common classification of extractive companies among different government agencies, and to align the data from the mining register with the tax authority to enable effective reconciliation. The solving of these issues would make it easier for the government and citizens to monitor payments from individual mining companies. The report also recommends the institutionalisation of EITI in Mozambique through the development of an EITI law.
The national EITI Coordinating Committee has set the following objectives for the EITI in 2019-2021:
Read more in Mozambique's 2017-2018 EITI Report
Read more in Mozambique EITI 2019-2021 Operation Plan
The Mozambican EITI Secretariat was established in early 2009. 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.
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.
Mozambique's first Validation against the 2016 Standard commenced on 1 January 2017. Mozambique was found to have achieved meaningful progress in implementing the EITI Standard in October 2017.
This EITI Report covers Mozambique's extractive sector in 2017 and 2018. It was published in February 2020.
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.
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.
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.[1]
Social and economic contribution
The extractive sector in Mozambique contributed 6.8% to GDP in 2017 and the contribution grew to 7.4% in 2018. According to the EITI 2017-2018 Report, the sector contribution was 17% and 9% of the total revenue collected in 2017 and 2018, respectively.