This Policy Brief analyses the actual tax contribution of the Liquefied Natural Gas (LNG) project in the Rovuma Basin, Mozambique, based on a tax modelling methodology. Contrary to expectations of substantial and immediate revenues, the analysis reveals that the Mozambican state will face a long period of tax deferral, with a significantly modest effective share of gross revenues. The current tax architecture, dominated by the cost recovery mechanism and the deferral of Corporate Income Tax (IRPC), exposes the country to substantial risks, including gas price volatility and the perpetuation of quasi-sovereign liabilities through Empresa Nacional de Hidrocarbonetos (ENH).
The document argues that the concentration of resources in LNG represents a high opportunity cost, diverting investments from sectors with greater potential for job creation and economic diversification. It is concluded that LNG, in its current form, is not the promised magic bullet, and strategic recommendations are proposed to promote transparency, diversification and a more robust management of natural resources.
