By June 2025, the Mozambican state had quietly deposited approximately US$210 million from oil and gas revenues into the newly established Mozambique Sovereign Fund (FSM). While this sum is a welcome addition, it remains small compared to the potential gains if the Rovuma Basin projects expand as anticipated. This figure, reflecting collections moved into a transitional account at the Bank of Mozambique, indicates a faster pace of inflows than in 2024 and serves as an early sign that resource rents are beginning to enter public funds. The significant potential of large-scale liquefied natural gas (LNG) projects in the Rovuma Basin, particularly their long-term prospects, is consistently highlighted by both the government and industry. Official forecasts, which informed the FSM’s design, indicate that state revenues could reach several billion dollars annually by the 2040s. These projections underscore the rationale behind the FSM’s legislation and emphasise that every policy decision made now will have lasting repercussions for decades.
Projects, geopolitics and the production timeline
Offshore discoveries in Mozambique are currently being transformed into a complex network of FLNG (Floating Liquefied Natural Gas) and onshore LNG projects, spearheaded by major international companies. Eni’s Coral projects have progressed to commercial production, with approvals for subsequent phases (Coral Norte) having cleared significant regulatory hurdles. Concurrently, ExxonMobil, TotalEnergies, and other groups are advancing area-based developments and front-end engineering work.However, project timelines remain uncertain and prone to delays. Factors such as security incidents in Cabo Delgado, financing constraints, and the repercussions of previous force-majeure declarations have repeatedly postponed full-scale development. Consequently, revenue receipts are expected to increase erratically, and policymakers should anticipate volatility rather than guaranteed, consistent flows.
Governance at the crossroads
Mozambique’s Fiscal Stabilisation Mechanism (FSM), established by Law No. 1/2024, allocates extractive revenues between the state budget and the fund. For the first 15 years, the split is 60/40 in favor of the budget, shifting to 50/50 thereafter. All receipts are initially placed in a transitional account before being transferred to the FSM. This structure reflects a deliberate effort to balance immediate fiscal needs with long-term intergenerational savings; however, the effectiveness of such laws ultimately depends on strong institutional enforcement.The independence and composition of the FSM’s Supervisory Committee are critical. Emanuel Chaves, elected in mid-2025, chairs this nine-member oversight body, which is tasked with monitoring deposits and supervising fund management. The effectiveness of this position will be judged by the rigor of its oversight, rather than by rhetoric. Civil society has already demonstrated vigilance by challenging budgetary decisions to redirect a portion of the fund’s revenues into current spending without clear legal justification. This public scrutiny is not a hindrance, but a necessity.
Between promise and peril: lessons from elsewhere
Mozambique faces a familiar dilemma: sovereign wealth funds can be powerful governance instruments when established with robust fiscal rules, independent management, clear transparency, and consistent reporting. However, they risk becoming liabilities if influenced by short-term political agendas.The Norwegian Government Pension Fund Global serves as a clear model for converting finite hydrocarbon wealth into enduring national assets through exhaustive transparency, parliamentary rules, and professional investment governance. Similarly, Chile’s stabilisation mechanisms and Botswana’s Pula Fund demonstrate how to protect budgets from commodity volatility and preserve savings for future generations.Conversely, experiences in Angola and other countries highlight how weak oversight and politicised investments can erode public trust and diminish returns. International guidance from the IMF and the Natural Resource Governance Institute emphasises these crucial trade-offs: effective rules, robust oversight, and public access to information are essential, not optional.
What Mozambique should do next
If the FSM is to become beyond a repository for occasional windfalls, policymakers must take the next 24 months as a governance sprint. First, publish complete and timely reports of all the receipts and transfers from projects and make the fund’s legal interpretations public; secondly, lock in operational independence for the fund manager with competitive hiring and market-based remuneration; third, adopt simple, credible fiscal rules for withdrawals that are protective of debt sustainability and shield critical capital investment; and lastly, invite multilateral technical audits and peer reviews to build a domestic confidence. These are not bureaucratic protocols, they are strategic insurance against the resource curse.
Mozambique is at a crucial juncture. The US$210 million received signals progress in revenue collection, but this alone won’t guarantee a positive outcome. The nation’s future hinges on immediate decisions regarding transparency, independence, and the allocation of its resources. These choices will determine whether liquefied natural gas (LNG) becomes a catalyst for widespread development or a source of instability. The FSM can serve as a safeguard against short-sighted policies, but only if Mozambicans advocate for institutional design, rather than political opportunism, to dictate how wealth is saved and spent.
By Sesona Mdlokovana
Associate at BRICS+ Consulting Group
African Specialist
**The Views expressed do not necessarily reflect the views of Independent Media or IOL.
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