Get more Mail & Guardian
Subscribe or Login

Why the discovery of natural gas in Mozambique has produced tragedy

On 18 February 2010, Anadarko Moçambique  —  a subsidiary of Anadarko Petroleum (bought by Occidental Petroleum in 2019) — discovered a massive natural gas field in the Rovuma Basin off the coast of northern Mozambique. Over the next few years, some of the world’s largest energy corporations flocked to the Cabo Delgado province, where the basin is located. These included corporations such as France’s TotalEnergies SE (which bought Anadarko’s project), the US’ ExxonMobil, and Italy’s ENI, which collaborated with the China National Petroleum Corporation for “oil and gas exploration and production”.

These massive liquefied natural gas (LNG) projects by these corporations hold a potential value of $120-billion — according to Standard Bank Mozambique — with TotalEnergies SE and ExxonMobil in control of the most lucrative concessions. This valuation came at the same time when Mozambique held a rank of 145 out of 155 countries in the Gender-related Development Index, according to the Human Development Report 2009, and ranked 172 out of 182 countries, according to the Human Development Index. The immense find of the natural gas field and these LNG projects were poised to benefit an impoverished Mozambique economically and socially.

In 2014, Mozambican Finance Minister Manuel Chang said that the revenue earned from this massive natural gas find would allow Mozambique’s government to “invest in energy, tourism and infrastructure. The Nacala, Beira and Maputo corridors, which will foster stronger regional communication links, are being developed to provide unique opportunities. Agriculture is at the base of our development, and fisheries is also very important, as we have a 2 700-kilometre-long coastline.”

Chang said that he was aware of the dangers posed by a massive revenue influx resulting from the discovery such as this (a problem called the Dutch disease). “[W]e are going to use the income from mineral resources to diversify and reduce inequality,” he said. “We are investing heavily in education and health, because we understand that without a skilled and healthy population, there can be no growth.”

On the face of it, Mozambique seemed fated for a bright future. The natural gas find would help generate money for its government, whose officials seemed smart enough to avoid the pitfalls of the resource curse. But everything went wrong soon afterward. Two tragedies befell Mozambique. An insurgency swept through northern Mozambique, the very region of the natural gas bonanza, and a corruption scandal paralysed the government, with Chang being arrested in South Africa in 2018.

Green-collar criminals

In 2017, armed militants took charge of large sections of Mozambique’s Cabo Delgado province. They operated under the banner of al-Shabaab (the youth). These young men hailed from Cabo Delgado, Nampula and Niassa; each of these provinces saw poverty rates rise in the aftermath of the natural gas find (the poverty rate doubled in Niassa between 2008 and 2014). Meanwhile, the state has operated against the poor population from these provinces with extreme force: for example, in 2014 Mozambique’s Rapid Intervention Unit (Força de Intervenção Rápida) used violence against desperate people trying to make a living in the ruby fields of Cabo Delgado’s second-largest city, Montepuez.

Bonomade Machude Omar, who is the leader of al-Shabaab, was born in Mozambique’s town of Palma, raised in the government and Islamic schools of Mocímboa da Praia, and trained in Mozambique’s military forces before he gathered several youths to support him against the extreme poverty witnessed in Mozambique’s northern provinces. Omar first led this insurgency against poverty in the natural gas-rich provinces of Mozambique under the flag of al-Shabaab and then later — opportunistically — under the flag of the Islamic State.

For that reason, the US State Department has designated him as a terrorist, and the militaries of Rwanda and the Southern African Development Community, which includes troops from Botswana, Lesotho, South Africa, Angola and Tanzania, are now operating alongside the army of Mozambique in Cabo Delgado. They are doing the dirty work for ExxonMobil and TotalEnergies SE.

White-collar criminals

Meanwhile, a trial has begun in a courtroom in Mozambique’s capital, Maputo, where 19 men have been “accused of blackmail, forgery, embezzlement and money laundering”. They have been charged with a $2-billion “hidden debt” corruption scandal. In 2013-14, these men formed three companies to take advantage of the natural gas discovery. ProIndicus was set up in January 2013 to provide security to the multinational energy firms; Ematum, formed in August 2013, was set up under the pretext of being a tuna fishing company, which would carry out fishing off the northern coastline; MAM, set up in May 2014, was to provide shipyard services for the multinational energy firms. Each of these companies was co-owned by the Mozambique intelligence service known as Serviço de Informações e Segurança do Estado (SISE). None of these existed beyond the paperwork; the chief executive officer of all three firms was António Carlos do Rosário, a senior SISE official.

Most of the available evidence for the case comes from indictments in the US District Court in New York, since New York banks offered their services for the bribes that anchored the deals. The three paper companies — controlled by senior officials of Mozambique’s government — took $2-billion worth of loans from Credit Suisse and VTB Capital (called Investment Bank 1 and 2 in the indictments). The loans, 13% of Mozambique’s GDP, were zipped around by consultancies (Palomar) and holding companies (Privinvest) and involved people from a wide range of nationalities (Mozambique, United Arab Emirates, Lebanon, New Zealand, UK and Bulgaria) who were implicated in the “hidden debt” scandal.

The International Monetary Fund (IMF) suspended loans to Mozambique in April 2016, just after news broke of the hidden debt scandal. Mozambique’s economy contracted as international donors joined the IMF to cut off infusions of capital, leading to the metical, Mozambique’s currency, tanking by a third of its value. In 2019, Mozambique struggled to renegotiate its debt, fighting to prevent the seizure of future revenues from the gas fields by the wealthy bondholders.

There are no armies rushing to deal with this scandal as Manuel Chang sits in South Africa fighting extradition to the US, as António Carlos do Rosário, Gregorio Leao, and Cipriano Sisinio Mutota — all former SISE officials — sit in a courtroom in Maputo. With them in the dock is Ndambi Guebuza, the son of the former Mozambican president Armando Guebuza. It is unlikely that they will implicate the system.

For instance, former president Guebuza is not facing any charges, neither is his defense minister nor the current president, Filipe Nyusi. Nor is one of France’s richest men, Iskandar Safa, who is suing Mozambique for his money after his associate — Jean Boustani — was acquitted by a US court over jurisdiction qualms. And nor are the banks, Credit Suisse or VTB Capital, being prosecuted in court.

One tragedy — an insurgency against poverty that has opportunistically taken on the mantle of the Islamic State — faces the full wrath of African armies. Meanwhile, another tragedy — the criminal theft of billions of dollars from a poor country — is being settled in courtrooms and backrooms. Omar is the villain of the day, while Chang, Carlos do Rosário and their associates will face harassment and short jail terms.

The real crooks, meanwhile, will take their seats at Dubai’s Cavalli Club and enjoy their $700 Wagyu grade 9+ steaks, smiling and plotting their next deals.

This article was produced by Globetrotter

Subscribe for R500/year

Thanks for enjoying the Mail & Guardian, we’re proud of our 36 year history, throughout which we have delivered to readers the most important, unbiased stories in South Africa. Good journalism costs, though, and right from our very first edition we’ve relied on reader subscriptions to protect our independence.

Digital subscribers get access to all of our award-winning journalism, including premium features, as well as exclusive events, newsletters, webinars and the cryptic crossword. Click here to find out how to join them and get a 57% discount in your first year.

Vijay Prashad
Vijay Prashad is an Indian historian, editor and journalist. He is the chief editor of LeftWord Books and the director of Tricontinental: Institute for Social Research. He is a senior non-resident fellow at Chongyang Institute for Financial Studies, Renmin University of China. He has written more than 20 books, including The Darker Nations and The Poorer Nations. His latest book is Washington Bullets, with an introduction by Evo Morales Ayma.

Related stories

WELCOME TO YOUR M&G

If you’re reading this, you clearly have great taste

If you haven’t already, you can subscribe to the Mail & Guardian for less than the cost of a cup of coffee a week, and get more great reads.

Already a subscriber? Sign in here

Advertising

Subscribers only

The South African Bone Marrow Registry celebrates 30 years of...

‘It’s not drilling into bones!’: Misconceptions keep donors away, says SABMR, but a match outside of a patient’s family is a needle in a haystack

R500-million Covid-19 Gauteng hospital contract was irregularly awarded — SIU

The bank accounts of Pro Service Consulting and Thenga Holdings have been frozen

More top stories

Judge John Hlophe withdraws interdict against parliament

The matter will be heard by a judge of the Johannesburg division when the matter is re-enrolled

Almost 2 000 South Africans step up to report corruption

The most-reported crimes range from extortion and abuse of authority to Covid-19 related graft, according to a new report by Corruption Watch

Nersa approves Karpowership generation licences

The Organisation Undoing Tax Abuse has questioned why Nersa has not immediately provided its reasons for issuing the controversial generation licences

With its industrial base decimated, SA’s economy needs real change...

Speaking at a book launch on Tuesday, the finance minister said a focus on manufacturing is critical to stem the country’s deepening unemployment crisis
Advertising

press releases

Loading latest Press Releases…
×