Mozambique expects state revenue with gas firing in 2029

Othe calculations result from the mid-term fiscal scenario (CFMP) 2027-2029, recently approved by the Council of Ministers, which guides the formulation of the state budget and fiscal policy for the coming years.

According to the document, state revenues associated with gas projects are expected to reach US$80.1 million (EUR69.4 million) at USD 2027, 78.4 million (EUR 67.9 million) at 2028 and USD 101 million (EUR 87.5 million) at 2029.

The government states that “state revenues from the LNG operation should remain relatively stable in 2027” and that “from 2029 onwards, gradual acceleration is expected”.

Mozambique has three development megaprojects approved for exploration of Liquefied Natural Gas reserves in the Rovuma basin, classified among the largest in the world, off Cabo Delgado, in the north of the country.

Eni’s Coral Sul project has been the only one in operation since 2022, having been approved last October’s investment in a second floating platform for extraction, North Coral, an investment of 7.2 billion dollars (6.2 billion euros) that from 2028 will allow doubling production to 7 million tonnes per year (mtpa) of LNG, with a third unit under study.

After four years of suspension due to terrorist attacks in Cabo Delgado, the Mozambique LNG (Area 1) project, operated by TotalEnergies, of 20 billion dollars (17.4 billion euros), officially resumed in January and provides for up to 13 mtpa from 2029, followed by the Rovuma LNG (Area 4) project, of 30 billion dollars (26.1 billion euros), operated by ExxonMobil, with 18 mtpa scheduled after 2030, and whose final investment decision is expected in September.

According to the projections of CFMP 2027-2029, the Southern Coral will remain operational throughout this period, while the North Coral will enter initial production in 2028. On the other hand, about Mozambique LNG, led by TotalEnergies, provides for the preparation phase in 2027, development in 2028 and “initial production in the last quarter” of 2029.

The official scenario admits that economic growth should progressively benefit from the expansion of the energy sector and major energy projects, with emphasis on the LNG.

Under the Sovereign Fund Act, in the meantime created, 60% of the net gas revenues will be channeled to the State Budget and the remaining 40% to the Sovereign Fund of Mozambique.

The executive plans to transfer some USD 48.1 million (EUR 41.7 million) in 2027, USD 47 million (EUR 40.7 million) in 2028 and USD 60.6 million (EUR 52.5 million) in 2029.

The CFMP states that these funds will support investments in economic and social infrastructure, agriculture, renewable energy and industry.

Despite the favourable scenario, the government acknowledges that projections remain dependent on the evolution of international markets, the timing of projects and the security situation in the implementation areas, in a scenario where the province of Cabo Delgado continues to record attacks by insurgent groups.

The forecasts are part of the Executive’s fiscal consolidation strategy, which aims to gradually strengthen the burden of internal revenue on state funding and reduce the vulnerability of public finances.

The document provides for a reduction in public debt of 72.2% of gross domestic product (GDP) in 2025 to 67.1% in 2029, in view of the increasing contribution of LNG revenue.