Portugal sale of stake in Mozambique dam delayed


Portugal’s planned sale of its 15-percent stake in Mozambique’s Cahora Bassa hydroelectric dam has been delayed due to technical and financial problems, but the countries’ leaders said yesterday they expect to reach an agreement on the matter soon.

“Obviously our expectation was to reach a deal, but it did not happen at this moment due to the technical complexities involved,” Mozambique President Armando Guebuza said after meeting Portuguese Prime Minister Pedro Passos Coelho in Lisbon.
“We believe that we will soon have a solution for these problems and will reach a deal,” he added. “There is willingness from both parties.”

Mozambique’s Energy Minister Salvador Namburet was quoted earlier on Tuesday by Portuguese state news agency Lusa as saying the parties had failed to agree on a price for the stake.

Cahora Bassa, built in 1969-74 and still Africa’s largest concrete dam, is seen as vital for Mozambique’s energy strategy as it recovers from a debilitating civil war.

The two countries signed a draft agreement in March 2010 for the Portuguese state to sell half of its stake in the dam to Portuguese power grid operator REN, with Mozambique utility CEZA reportedly interested in the other 7.5 percent.

The Portuguese state is set to sell its 51 pct stake in REN by January under the terms of its 78-billion-euro bailout from the European Union and the International Monetary Fund.

Portugal retained 82 percent of the dam when former colony Mozambique gained independence in 1975, but transferred majority ownership to the African nation in 2006 by selling a 67 percent stake for $950 million.

Portuguese media have reported Mozambique wants to use a lower valuation than the one used five years ago for the dam.

Passos Coelho said “matters of technical and financial nature” had prevented the deal to be closed, but added both countries reaffirmed political will to reach an agreement.

Mozambique plans to raise output at the dam to 3,220 MW from 2,075 MW over next five years to meet rising demand in the country and in the southern African region.

It also is looking to raise $1.8 billion to fund a new power transmission line to link Cahora Bassa to the capital Maputo, which is currently supplied via a line that connects the dam with South Africa and then transmits power back to Mozambique.

Mozambique’s domestic demand for power will triple to around 4,500 MW in the next 20 years from 1,500 MW now, according to estimates from national power company EDM.