Mozambique Votes Against Backdrop of $50 Billion Gas Bonanza

MAPUTO (Capital Markets in Africa) – Mozambicans voted Tuesday in elections that have the highest stakes in the southeast African nation’s history, after a campaign marked by violence, insurgent attacks and the fallout from a debt scandal.

The winner will oversee more than $50 billion of investments in gas projects planned by companies including Exxon Mobil Corp. and Total SA, and need to tackle an Islamic State-linked insurgency that threatens to disrupt them. The vote’s credibility will test a peace accord the government signed in August with the main opposition to end the violence that flared in 2013.

“The next couple of years are key for those projects to be built,” said Darias Jonker, Africa director at Eurasia Group. “Dealing with the insurgency effectively is a massive priority to avoid risking the implementation.”

The government expects its gas revenue to reach nearly $100 billion over 25 years. It will have to wait until after the next polls for the windfall, as gas at the two biggest projects won’t flow until after 2024. Still, the state has already cashed in more than $1 billion in capital-gains taxes as Exxon and Total bought large stakes in the fields.

Total’s Mozambique LNG project is Africa’s biggest private investment yet, costing more than $20 billion, and Exxon’s will be even bigger if it gives the final go-ahead next year.

The Front for the Liberation of Mozambique, or Frelimo, has been in power since the country won independence from Portugal in 1975. It fought a 16-year civil war against the Mozambican National Resistance, or Renamo, which claimed as many as 1 million lives before it ended in 1992. Past election disputes have exacerbated tensions between the two parties.

President Filipe Nyusi, who won 57% support in the last vote in 2014, is seeking a second five-year term. His main challenger is Ossufo Momade, who took over as leader of Renamo last year after the death of Afonso Dhlakama, who headed the party for nearly four decades.

Last week, the police said members of an elite unit were implicated in the assassination of a senior election observer. The Oct. 7 shooting occurred in a province where the ruling party garnered 94% of the vote in 2014, and where the election commission is accused of having registered about 300,000 more voters than a 2017 census indicates were eligible. The commission says its numbers are reliable.

Local observer groups have complained that the electoral commission failed to accredit thousands of their monitors. Nyusi told reporters after voting Tuesday in Maputo that 4,000 were registered — quadruple the amount in the 2014 polls. After casting his vote in his home Nampula province, Momade showed reporters what he said were pre-marked ballot papers his party officials had caught Frelimo supporters with.

The Technical Secretariat for Electoral Administration, the state organ in charge of organizing the polls, has received no formal complaint and the courts have been working since voting started to deal with any irregularities, Director-General Felisberto Naife told reporters. He declined to comment on Momade’s allegation without first investigating it.

Polls closed and counting began at 6 p.m. in Maputo. Voting was orderly even though there were long queues, according to the head of a European Union observer mission, Nacho Sánchez Amor.

High Stakes
The election of provincial governors for the first time, which was part of the peace deal, raises the stakes even higher, said Ericino de Salema, a lawyer and country director for the Electoral Institute for Sustainable Democracy in Africa, which is observing the elections.

Jonker sees the race as being the closest since Frelimo edged out Renamo by a margin pf 52% to 48% in 1999, partly because a corruption scandal involving $2 billion in hidden debts has hit the ruling party’s popularity. A trial in the case, in which three ex-Credit Suisse Group AG managers have pleaded guilty, is due to start in New York later Tuesday.

Still, Jonker and NKC African Economics analyst Gary van Staden reckon Nyusi is likely to win. A second round will take place if no-one secures an outright majority.

“Nyusi may narrowly avoid a run-off given that Frelimo managed close to 52% of the vote in last year’s local authority elections,” Van Staden said. “The only guaranteed outcome is that Renamo will dispute the results as they have done for every election since 1994 – usually without any substantive evidence of misconduct.”

In the far-north Cabo Delgado province, the government has struggled to contain an insurgency that began two years ago and has left hundreds dead. Local and international media have reported the arrival of Russian mercenaries since last month to help the government combat the insurgents, where Islamic State has claimed involvement in about a dozen incidents since June. Russia has denied it has any troops in Mozambique.

The defense ministry has claimed some victories this month, destroying insurgent bases and killing what it called a considerable number of fighters. The involvement of private military companies could help contain the violence, but won’t end it over the next few years, according to Jonker.

Thousands of people won’t be able to vote in districts of Cabo Delgado most affected by the attacks because of safety concerns, according to Human Rights Watch.

Source: Bloomberg Business News