(ALLAFRICA) Mozambique: Calls for Renegotiating Mega-Projects

COMMENT - Neoliberalism is under fire in Mozambique, Tanzania and Zambia.

Mozambique: Calls for Renegotiating Mega-Projects
31 January 2011

Maputo — The Governor of the Bank of Mozambique, Ernesto Gove, has claimed that the economic and social conditions now exist in Mozambique for the government to renegotiate contracts signed with some of the mega-projects that have come to dominate the economy.

Speaking on Friday at the closing session of a meeting of the Bank's Consultative Council in Mozambique, Gove said "In investment everybody has to win, otherwise social tensions are created".

Cited by the independent television station STV, he stressed he was not suggesting that a law be passed one day and amended on the following day. "That's not what I'm saying", he declared. "But the conditions do exist for us to rethink what we did 10 or 15 years ago".

The early mega-projects, notably the Mozal aluminium smelter on the outskirts of Maputo, and the processing of natural gas in Inhambane province by the South African petro-chemical giant, Sasol, have come under frequent criticisms for the generous tax exemptions granted by the government.

The government's reply has been that, in the negotiations (mainly with the company BHP-Billiton) to set up Mozal, the fiscal exemptions were a sine qua non. Without them, the smelter would not have been established, and the country required such a flagship project in order to announce to the world that it was a safe destination for investment.

Up until now, government officials have tended to dismiss suggestions that the time has come to renegotiate the Mozal and Sasol contracts. Gove has broken with that apparent consensus, suggesting that the time has come to remove the tax exemptions.

He also called for "assessing the participation by Mozambicans in the mega-projects". Some of them exploited non-renewable resources (such as natural gas and coal) "and their exploitation must take account of future generations".

Gove was caustic about a model of regional integration that simply meant importing more goods from South Africa. He noted that some South African companies had set up establishments in Mozambique that simply exist to sell South African goods.

"Regional integration that should not imply that we are the ones being integrated", he said. "Regional integration must be a process in which everybody wins. We have to see where we have competitive advantages and bet on that sector".