Transparency Initiative: Big increase in oil and gas revenue in Mozambique
Latest EITI Report shows that revenue is growing, but still small relative to the budget.
In Mozambique, government revenues from the extractive industries reached approximately US $100 million in 2011. The figure was revealed in Mozambique’s fourth EITI Report, published earlier this week.
Revenues increased by almost 60 per cent compared to the previous year. The increase reflects the growing importance of the sector. Mozambique holds world-class deposits of coal and natural gas in its northern provinces, as well as other minerals.
In the past years, some of the world’s largest mining and oil companies have invested in Mozambique. Coal is already being exported, while production on the extensive off-shore gas fields of the Rovuma Basin has not started yet.
Hydrocarbons contributing more than mining
Anadarko, a North American hydrocarbons enterprise, was the largest tax payer out of the 39 companies that reported. In the mining sector, the Brazilian giant Vale contributed the most to the state.
Payments made by oil and gas companies represent 69 per cent of the reported revenues, despite there being more companies operating in the mining sector.
The largest revenue stream from the extractive sector was Corporate Income Tax, contributing almost US $55 million dollars to state coffers. Almost 90 per cent of this was paid by hydrocarbons companies, while mining companies contributed around 10 per cent.
Revenue from corporation tax increased by 65 per cent and accounts for 59 per cent of all revenues from the extractive sector in 2011.
A small but growing sector
The 2011 EITI Report shows that the extractive sector still plays only a small role in the economy, representing just two per cent of Gross Domestic Product. However, in 2012 the oil, gas and mining industry was the fastest growing sector and helped propel GDP growth to 7.4 per cent.
Most large-scale projects are in their initial phase, which explains relatively low production figures and tax payments compared to the tens of billions of dollars of investments. Mozambique still relies heavily on foreign aid, although aid is falling as a percentage of overall revenue.
The state budget in 2011 was worth close to US $4.5 billion. Mining revenues covered only around two per cent of this, while almost 45 per cent of the budget was funded by foreign grants and loans.
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