Mozambique’s Prime Minister admits possibility of renegotiation of large projects

12 May 2011

Maputo, Mozambique, 12 May – The prime minister of Mozambique, Aires Ali, Wednesday in Maputo admitted the possibility of the government renegotiating large projects with their investors, whilst responding in parliament to a number of questions.

In his speech, Ali said that the proposed law on public-private partnerships (PPPs) that had been submitted to parliament for approval, established that renegotiation of certain contractual clauses by mutual agreement was allowed, with a view to sharing the benefits of the projects.

“What is proposed does not aim to remove all the incentives given to the projects, as any measure of that kind could affect the consistency of the economic policies adopted by the Mozambican government and affect the entry of future large foreign direct investments,” the prime minister said.

Some people have called for the government to renegotiate its contracts with large projects as they benefit from a lot of tax breaks, making the State a secondary beneficiary of the investment.

Mozambique’s history of large-scale projects is relatively recent as they have only appeared since the end of the country’s civil war in 1992.

The first large project – the Mozal aluminium foundry – was approved in 1997 and, according to Finance Minister, Manuel Chang, served as a calling card for the country to present itself as a safe destination for foreign direct investment.

In his speech to parliament, Chang noted a number of benefits for the country resulting from large projects, including technology and knowledge transfer, job creation, creation of infrastructures, promotion and development of small and medium-sized companies, revenue generation, savings and foreign reserves, export promotion, and community development amongst others. (macauhub)