16 March 2017

Mozambique: Japan Offers Grant Aid for Mozambique's Fuel Needs

Tokyo — The Japanese government has promised to help Mozambique overcome its current fuel difficulties.

Earlier this month, fuel distribution companies warned that the current fuel subsidy system is not working and that, if no changes are made, the country may soon be unable to import liquid fuels. The problem is that the prices fixed by the government for sales to the public of petrol and diesel are lower than the prices paid by the importers on the world market.

The government has promised to pay the companies the difference, but this subsidy is not paid promptly. The companies complained, in a letter sent to Prime Minister Carlos Agostinho do Rosario in early March, that the government now owed them about 70 million US dollars.

Japan, however, may now be coming to the rescue. The joint statement issued on Wednesday, after official talks in Tokyo between Mozambican President Filipe Nyusi and Japanese Prime Minister Shinzo Abe declared that Abe “expressed his intention to assist Mozambique's efforts towards economic and fiscal reforms through technical cooperation, and also to support the balance of payments by extending grant aid to procure fuel and other necessary goods”.

No details were given but this looks like a clear pledge of a Japanese grant to purchase liquid fuels. Nothing was said about how much money will be involved or for how long this support will last.

Nyusi did not shed much further light on the issue in the press conference winding up his official visit to Japan. He said the two governments will work to set up a mechanism to “stabilize the problem of liquid fuels and of the public finances”.

The details still needed study, Nyusi added, “but everything indicates that it will be through a grant”.

According to the joint statement, Nyusi welcomed “the growing investment by Japanese companies in Mozambique” and assured Abe of his government's willingness “to provide a safe, secure and stable investment environment”.

The two leaders stressed the importance of Japanese cooperation in the Mozambican electricity sector - but Abe “stressed the importance of Mozambique restoring debt sustainability”, as a condition for future loans.

The Mozambican Finance Ministry has repeatedly stressed that a return to debt sustainability requires renegotiating the terms of the loans to the security-related companies Ematum (Mozambique Tuna Company), Proindicus and MAM (Mozambique Asset Management), that were illegally guaranteed by the previous government, headed by President Armando Guebuza. That renegotiation in turn depends on the international, independent audit of Ematum, Proindicus and MAM now being undertaken by the US company Kroll, reputedly the foremost forensic auditing company in the world.

Nyusi briefed Abe on the debt issue and, according to the statement, he “reaffirmed Mozambique's commitment to cooperate with the IMF and other stakeholders, and to negotiate with the private creditors to resolve the issue as soon as possible”.

The two leaders reaffirmed their commitment to ProSavana, a triangular agricultural development programme between Mozambique, Brazil and Japan. This programme has come under attack from some civil society organization who claim that is is a “land grab” that will only benefit Brazilian agrobusiness interests. The Mozambican government, however, strongly denies that any peasant farmers will lose their land.

The joint statement says that ProSavana, to be centred on the Nacala Development Corridor in northern Mozambique, “aims to contribute directly to the development of agriculture and food security and thereby benefits the entire people”.

Nyusi and Abe “reiterated their commitment to continue close dialogue with civil society and rural communities in the planning and implementation of ProSavana with a view to duly protecting their rights”.

Nyusi also thanked Japan for its “longstanding support in the training of young Mozambican professionals in industrial work skills, business education and vocational and technical training”. Abe announced that Japan “will promote the capacity building” of more than 1,000 Mozambicans over the next five years.

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