(Bloomberg) -- Mozambique’s presidential candidates are advocating for the nation to renegotiate contracts for its so-called mega-projects with developers, a stance that may risk delays to the construction of liquefied natural gas facilities by TotalEnergies SE and ExxonMobil Corp.
Daniel Chapo, the nominee from the ruling Liberation Front of Mozambique known as Frelimo, said last month that revisions should be on a contract-by-contract basis. The country’s three opposition-party candidates have also called for changes, sparking a national debate ahead of presidential elections scheduled for Oct. 9.
A common thread is that the southeast African nation doesn’t benefit enough from its deals with multinational investors. World Bank data showed almost three in four Mozambicans lived on $2.15 or less per day last year, worse than a decade earlier. The government has estimated the LNG projects may add close to $100 billion to revenue over the lifetime.
Joaquim Chissano, Mozambique’s longest-serving president who led the country for almost two decades as it rebuilt after a devastating 16-year civil war, welcomed the debate and said the country needs to be better prepared to handle negotiations with multinational corporations. Project developers have raised concerns about potential policy changes.
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“For us, it’s important to have the confirmation that the new president will follow the same policy regarding these large projects,” TotalEnergies Chief Executive Officer Patrick Pouyanne told investors on a July 25 call. “So say, by end of the year, we should clarify how we should be able to move forward.”
The French oil and gas producer is leading a $20 billion LNG export project in the northeastern Cabo Delgado province that’s been on hold since 2021 because of nearby attacks by an Islamic State-backed insurgency. Exxon’s investment is also delayed.
To be sure, campaign statements might not turn into action after the elections.
“To some extent, the rhetoric might reflect election noise, rather than a real surge in resource-nationalist policymaking or contract renegotiations,” said Anne Frühauf, managing director at risk adviser Teneo. “But such statements can never be taken lightly in the context of a forthcoming presidential succession.”
While it’s unclear which mega-projects contracts could become renegotiation targets, the statements from presidential candidates are enough to generate fundamental uncertainty for investors, Frühauf said.
But a 2014 law that established a special legal and contractual regime for projects by TotalEnergies and Exxon in the Rovuma Basin means the government might not have much “wiggle room,” she said.
The government and companies would have to re-open contractual negotiations for any changes to be made, according to Fatima Mimbire, a social activist and opposition Democratic Movement of Mozambique candidate for governor of Maputo province.
“The companies are guaranteed and protected by what are called stabilization clauses,” Mimbire said. “A government cannot come and alter the terms of the contract arbitrarily.”
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