22 November 2007 – Mozambican minister of energy, Salvador Namburete, pledged earlier this week that not a cent of state funds will go to paying the US$700 million loan the government has taken to buy a majority shareholding in the Cahora Bassa dam.
A consortium consisting of CA Lyon (a French bank), and the Portuguese Investment Bank are providing the necessary funds.
The deal is expected to be signed before the end of November Namurete told reporters. A general meeting of shareholders in the Cahora Bassa hydro (HCB) would be held as well, and a new board of directors chosen, reflecting the new ownership majority. A Mozambican chairperson would also be chosen.
He reiterated that the loan would be repaid by sales of electricity from Cahora Bassa, particularly to clients such as South Africa’s Eskom, Zimbabwe’s Zesa and Mozambique’s EDM.
"The flow of sales was studied, the tariffs are known, and a model was drawn up to see how many years would be needed to repay the loan", Namburete said.
He added that HCB would be paying taxes for the first time as well as a concession fee – all of which would add to the state budget.
"This deal improves the budgetary situation, it doesn’t make it worse", the Minister explained.
HCB’s current sales revenue is US$150 million per annum, an amount Namburete is confident will be sufficient to pay off the loan, pay taxes and provide a yearly shareholder dividend.
He declined to comment on reports that the interest rate of the loan will be LIBOR (London Inter-Bank Offered Rate) plus two per cent. He said this, plus the repayment term, was still confidential, but would be released once the final documents had been signed.
HCB’s production this year is two gigawatt hours better than for 2006. Each of the five turbines has an installed capacity of 415MW and the dam water levels currently allowed for maximum production.
The financial consortium has hired Manitoba Hydro from Canada to supervise the maintenance and operation of the dam.
Responding to claims that this meant swapping Portuguese control for Canadian control, Namburete replied that Manitoba was a "technical service partner" that would work closely with HCB management.
When asked about the large debt outstanding by Zimbabwe’s Zesa, the minister replied that most of the debt has been repaid over the last three or four months and the outstanding debt now is only "one or two million US dollars". Zesa has apparently also paid of US$10 million out of an outstanding US$11 million to EDM.
When questioned about plans for a second power station at Cahora Basa, the minister said the priority was a dam at Mphanda Njuwa, about 70 kms downstream. He said the new dam "is vital for our economic independence. Furthermore, nowadays energy is determinant for attacking industrial investment, and we want that investment".
US$20 million has been spent on environmental impact studies and Namburete clearly stated that the government "is interested in guaranteeing the protection of our environment, and insists that proper environmental impact studies are done".