Mozambique’s government plans to establish a sovereign wealth fund to manage income from future gas production, President Filipe Nyusi said.
The state will also allocate a fixed portion of revenue to the state budget to fund infrastructure development, poverty reduction and economic diversification, Nyusi said in a speech on Wednesday in the capital, Maputo.
Companies including Eni SpA and Anadarko Petroleum Corp. are developing gas discovered nine years ago in deep waters off the coast of Mozambique, one of the world’s poorest countries. The southeast African nation holds 100 trillion cubic feet of proven natural-gas reserves, the third-biggest in Africa, according to the Energy Information Administration.
“Savings will serve as a cushion when gas prices are low,” Nyusi said. The state should manage the funds to avoid effects like Dutch Disease, he said, referring to the phenomenon in which a commodity boom makes a country’s currency more expensive and its other goods less competitive.
Nyusi said it’s estimated that the Rovuma basin, where Anadarko and other operators are present, may contain 270 trillion cubic feet of natural gas. If confirmed, the deposit would be the biggest in Africa.
Anadarko is planning to make a final investment decision on a $20 billion project in Mozambique, including an onshore liquefied natural gas processing facility, by June. Exxon Mobil Corp. plans to make a decision on an even bigger LNG project in the same area by the end of the year.
Anadarko and Exxon’s projects will be the biggest private investments in Africa, according to Standard Bank Group, a Johannesburg-based lender.