Contrary to previous announcements (February 2011, Economic policy), the government has announced that it may in fact introduce legislation allowing for the renegotiation of contracts for large investment projects in the country-so called mega-projects-to increase their contribution to the economy and public finances. There are only three mega-projects in production so far: the Mozal aluminium smelter, which is operated and part-owned by an Australian-based firm, BHP Billiton; the gas export pipeline operated by a South African company, Sasol; and the Moma titanium mine in Nampula province run by Kenmare Resources of Ireland.

The finance minister, Manuel Chang, made the announcement that the contracts may be revised to parliament amid an increasing number of complaints by local officials and journalists that the mega-projects contribute too little in terms of jobs and tax revenue. Currently, they provide around 4% of total state revenue but account directly for about 10% of GDP, a disparity that makes a prima facie case for increasing the tax burden on the projects.

The first mega-project deals were signed in the late 1990s, when the war-ravaged country had little foreign direct investment stock. To encourage pioneering investors the government offered them more favourable terms than more established investment destinations typically do. Given that foreign investor interest in Mozambique-and particularly its mineral resources-is now booming, it would be unsurprising if new deals were less generous to investors. However, revising existing contracts could prove to be a pyrrhic victory for the government. The long-term damage to its reputation as a reliable partner for foreign investors could outweigh the gains of upping the tax take from current projects, particularly if renegotiations are protracted and acrimonious or have an outcome perceived to be confiscatory. So far the precise terms of the new legislation have not been revealed, but Mr Chang stated that revisions to mega-project deals would happen only with the consent of all parties.