Zitamar Daily Briefing, 23 March

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Welcome to Zitamar’s daily Mozambique briefing for Monday, 23 March 2020

Zitamar Daily Briefing Mar 23

Need more detailed analysis of developments in Mozambique? Zitamar Consulting offers bespoke monthly reports tailored to your specific interests. Contact consultancy@zitamar.com for more information


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Mozambique’s health minister announced the country’s first positive case of coronavirus: a Mozambican citizen in his 70s who has recently travelled from the UK. He is currently in home quarantine

The Mayor of Maputo, Eneas Comiche, is in home quarantine having been at an event in London with Prince Albert of Monaco, who has since tested positive for Covid-19. The event was on 10 March, and Comiche — along with two aides — returned on 13 March

The Bank of Mozambique has introduced an emergency $500 million credit line, and is making it easier for banks to renegotiate the terms of loans to clients affected by the Covid-19 pandemic, to make liquidity in domestic and foreign currency available to support companies and families


The best of the rest:

  • Cabo Delgado insurgents attack, take Mocimboa da Praia (A Verdade, O País)
  • Exxon FID on Rovuma LNG unlikely before end of 2020 (Reuters)
  • CFM cancels long-distance trains in the south and centre of the country (RM)
  • Mozambique warns of price speculation on hygiene products (Lusa)
  • Exxon to use Pemba port for exploring Angoche block (AIM)

Cabo Delgado insurgents attack, take Mocimboa da Praia (A Verdade, O País)
Suspected Islamist insurgents attacked and took the town of Mocimboa da Praia in the early hours of this morning, and are flying their flag over the town, the Mozambican police have announced. The police said that  the attack started at 4:30 at a press conference this morning, according to A Verdade and O País — and efforts to retake the town were still ongoing by the time of a second press conference, at midday. The attackers have set up barricades at the main entrances to the town, but the Defense and Security Forces are fighting them and at any moment order will be restored, police spokesman Orlando Mudumanehe said in a statement, without taking questions from journalists.
Mocimboa da Praia is the place where it all started in October 2017, when attackers took the town for over 24 hours. The flag raised today is the Islamic State flag, which the Cabo Delgado insurgents have started using over the last year. Sources on the ground told Zitamar that many houses have been burned down in this morning’s attack, which is believed also to have targeted a boat in Mocimboa’s port which brings supplies to the security forces.

Exxon FID on Rovuma LNG unlikely before end of 2020, source tells Reuters (Reuters)
Exxon’s $30bn Rovuma LNG project is likely to be delayed as a result of the coronavirus and slump in gas prices. FID had been expected in the first half of this year, but sources now say this is unlikely, as raising financing is challenging in this climate. The US supermajor announced it was evaluating “significant” cuts to capital spending and operating expenses on Tuesday. Exxon has already committed to $500 million in initial investment in the project, but early works are being disrupted by coronavirus travel restrictions. “It seems as though they are electing to postpone some of the early stage works and contracts for now,” another source familiar with the matter said. “I doubt we can expect their FID before the end of 2020.”
Those waiting on the sidelines for the past six years for Mozambique’s big LNG boom had been certain 2020 would be it, but no one had predicted this pandemic – and no one knows how different the world will be as it emerges from the crisis. Economists say we could have a global recession as deep as that after the second world war. It is not just Mozambique’s fate that is uncertain. Projects across the globe are being stalled and the long-term impact of major investments like this is unknown. Cheap gas prices could speed up coal to gas switching in Asia and other countries around the world, ultimately boosting demand for gas. On the other hand, the pandemic has had a positive impact on the climate; during the lockdown pollution cleared in cities in China and elsewhere, and international airlines ground to a halt. At a time when governments in Europe were already preparing to take firmer action against climate change, this could be the final push that was needed to speed the fossil fuel phase-out.

CFM cancels long-distance trains in the south and centre of the country (RM)
Mozambique’s state ports and railways company, CFM, has cancelled all long-distance trains to Ressano Garcia, Goba and Chicualacuala in the southern rail system, as of Monday, in order to limit the spread of the coronavirus. In the railway system in the centre of the country trains to Moatize, in Tete, and Marromeu, in Sofala are cancelled.
The company will continue to operate urban trains bound for Matola-Gare, Moamba, Boane and Marracuene, in the southern region, and Dondo, in the Centre, but the trains will be limited to a maximum of fifty people per carriage.
In Maputo city the police are trying to force chapa drivers to respect passenger limits, but they are ignoring the controls, arguing they are already struggling to make a living. The minibus owners — believed to be high ranking army officers and top public servants — charge drivers a fixed fee for the use of their vehicles, which puts them under pressure to cover both the vehicle rental fee, and make a profit.

Mozambique warns of price speculation on hygiene products (Lusa)
Some commercial establishments are taking advantage of the Covid-19 pandemic to increase the prices of various products, mainly hygiene, the director of Industry, Transport and Tourism at the Inspection of Economic Activities, Virginia Muianga said on Friday.  The authorities are currently conducting a survey to see how long the existing stock can last, given the closure of some borders decreed by South Africa, in addition to monitoring establishments to curb price speculation, she added.
Trade and industry minister Carlos Mesquita also visited factories making sanitary products on Friday, and said with good management stock should last another two or three months — so there’s no reason for prices to rise.
It would be far more reassuring to hear from the government that supplies from South Africa are not going to be affected by the coronavirus lockdown, On Friday Nyusi promised logistical to support to ensure import-export supply chains keep functioning normally, but gave no further details

Exxon to use Pemba port for exploring Angoche block (AIM)
ExxonMobil plans to use Pemba port, in Cabo Delgado, northern Mozambique, as the basis for oil and gas exploration in Area 5B, in the Angoche district, off the northern province of Nampula, according to an environmental impact assessment produced by consultancy Impacto. Exploration work is expected in Q2 2021. The port, owned by state ports and railways company CFM, will first need a $5m upgrade.
This story should be handled with care. Impacto can advise, but will not decide what Exxon should do. It would seem strange to use Pemba while a bigger and better port, Nacala, is closer to Angoche.


Company Announcements

  • Total has announced it is cutting capital expenditure by 20%, or by more than $3 billion, in 2020 — mainly in the form of short-cycle flexible Capex, which can be arbitrated contractually over a very short time period; and $800 million of savings in 2020 on operating costs compared to 2019, instead of the $300 million previously announced

© 2020, Alexandre Nhampossa. All rights reserved.

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