HomeIndustry SectorsFinance and PolicyNo agreement on sale of stake in Cahora Bassa

No agreement on sale of stake in Cahora Bassa

The Cahora Bassa
hydroelectric power
Lisbon, Portugal — ESI-AFRICA.COM — 01 December 2011 – The governments of Portugal and Mozambique have failed to reach agreement on the sale of the 15% stake the Portuguese state still owns in the Cahora Bassa hydroelectric facility in Mozambique for what is described as “technical and financial reasons.”

The announcement was made here by Portuguese prime minister Pedro Passos Coelho and Mozambican president, Armando Guebuza, at the end of the first Luso-Mozambican summit. Instead an agreement in which Portuguese companies REN – Redes Energéticas Nacionais and Mozambique’s Companhia Eléctrica do Zambeze would each take a 7.5% stake, was expected to be announced next week.

Both pledged that the matter would be resolved quickly because there were only certain technical issues left to be resolved.

Preparations for the transaction began well over a year ago in March 2010 when the then Prime Minister José Sócrates visited Mozambique, noting that the 15% owned by state stake-holding  company Parpública – Participações Públicas SGPS would preferably be sold to REN and Companhia Eléctrica do Zambeze (which already own 85% of HCB).

REN, in which the Portuguese state has a majority stake of 51.1%, has always said that acquiring 7.5% of HCB would only make sense if it had a wider presence in Mozambique, specifically by being involved in the country’s power distribution grids.

Portugal’s stake in Cahora Bassa is far from being a comfortable asset, as last June valued its stake in HCB at €77.5 million, with an accumulated loss for imparity of €62.7 million, of which €22.5 million had been accumulated in 2011 alone.
Other than the HCB stalemate, the two governments signed a number of agreements, including those that give Mozambique access to the Portuguese historical, diplomatic and cartography archives, as well as financial aid from Portugal to the Mozambican state.