Economic nationalism? Domestic gas, rent capture and power generation: a comparative analysis of Mozambique and Tanzania

Recent gas finds in Mozambique and Tanzania and the subsequent state-centric model of domestic gas utilization have created opportunities for new sources of revenue and power generation, as well as reigniting the debate on economic nationalism. Although both countries have recently adopted reforms by separating the commercial and regulatory functions in the gas sector and share the state-centric approach to natural gas production, economic nationalism in the gas sector is driven by different circumstances in the two countries. The big questions are how domestic gas utilization differs in Mozambique and Tanzania, and what this says about economic nationalism. To highlight the differences in economic nationalism in the two countries, we contrast how the political elites in Mozambique and Tanzania exploit natural gas to create new spaces for capturing rents and generating power. In Mozambique, the gas that is retained for the domestic market rather than being exported has emerged as a key feature of new gas deals. We argue that in Mozambique the recently adopted regulatory frameworks have enabled the ruling elites to create new spaces for capturing rents and thus ensuring regime survival. In Tanzania, conversely, a combination of economic nationalism and previous bad experiences with independent power producers in the gas sector seems to have enabled the government to adopt a more active state-led approach towards domestic gas, with a focus on power production in order to boost energy security.