28 November 2007
Maputo — Apparent last minute objections from South Africa delayed the signing of the final documents on the transfer of a majority share in the Cahora Bassa dam from Portugal to Mozambique - with the knock-on effect of delaying for two hours the celebration rally addressed by President Armando Guebuza in the dam town of Songo on Tuesday.
Guebuza took the precaution of not starting the rally until he had been informed that all last minute difficulties had been overcoming, and that the Portuguese and Mozambican teams in Maputo had signed all the dozens of documents on the transfer of shares in the dam operating company, Hidroelectrica de Cahora Bassa (HCB), and the accompanying financial arrangements.
It had been expected that the documents would all be signed by Monday evening - but in fact it was not until about 11.30 on Tuesday morning that the whole deal was finalised down to the last comma.
Journalists who expected some kind of announcement on Monday were disappointed. They waited while delegation members went to and fro between rooms in Maputo's main conference centre.
The final transfer document was to be signed at ministerial level - by the Mozambican Finance and Energy Ministers, Manuel Chang and Salvador Namburete, and by Portuguese Finance Minister Manuel Teixeira dos Santos.
According to Wednesday's issue of the Maputo daily "Noticias", there was no sign of Teixeira dos Santos at the conference centre. At about 20.00, Namburete said he was going to the hotel where Teixeira dos Santos was staying to greet the Portuguese minister.
Evidently this was more than a normal greeting, for Namburete did not return to the conference centre for another two and a half hours. He informed journalists that the final negotiations might now go on into the small hours of the morning.
At 04.00 the negotiations were suspended, and no reason was given. It was at around 09.30 that an adviser to Teixeira dos Santos, Vasco Noronha, told reporters that the Portuguese Minister "is waiting for documents that are arriving from South Africa. These are important documents that must be signed by the South Africans and which are required by the banks before they order the transfer of the money to Portugal".
So by this stage the banking consortium, formed by CA Lyon of France and the Portuguese Investment Bank (BPI), were still awaiting for guarantees from South Africa before transferring 700 million dollars (the agreed price of 67 per cent of the HCB shares) to Portugal.
Since South Africa is not a shareholder in HCB, the only conceivable concern of the banks is that the South African electricity company Eskom, by far the largest of HCB's customers, should go on purchasing Cahora Bassa electricity. It is from those payments, that the banks will recoup the money lent to Mozambique.
Teixeira dos Santos was waiting for the documents from Pretoria to see what alterations the South African side may have made.
"Portugal is entirely willing to advance", said Noronha, "but we are waiting for the documents, without which we can do nothing.
We hope the South Africans are not making major alterations, but the Minister must see any alterations before he can sign in the name of Portugal".
According to a report in the independent newsheet "Mediafax", the dispute concerned a demand that, in the regular reviews of HCB's tariffs, the price to be paid by Eskom should decline. Mozambique rejected this demand.
A further question was that of responsibility for guaranteeing supplies to Eskom. Under the old arrangements Portugal was entirely responsible for guaranteed continuity in supplies: it was now agreed that responsibility would be shared in the same ratio as the new shareholding - 85 per cent for Mozambique, and 15 per cent for Portugal.
Eventually, Teixeira dos Santos did sign, but it was not until after 12.30 that Namburete finally announced that everything had been wrapped up.
The delay in Maputo meant that Teixeira dos Santos could not be present when Guebuza began the celebration rally in Songo. By the time he did arrive, the rally was over, and the visiting heads of state (Presidents Robert Mugabe of Zimbabwe, Levy Mwanawasa of Zambia, Festus Mogae of Botswana and Bingu wa Mutharika of Malawi) had left.
The Portuguese minister stayed in Songo for about 15 minutes, just long enough to meet Guebuza and congratulate him on the success of the negotiations.
He told the Portuguese news agency LUSA "there were a series of technical details that had to be finalised, some problems raised by South Africa which delayed the formalisation needed to make the transaction effective".
For Teixeira dos Santos the transfer of the dam to Mozambican control was a sign of Portugal's commitment "to continue strengthening our relations with Mozambique. That's what we want, that's what drove us, and it will continue to drive us".
He also revealed that Lisbon is prepared to sell off a further five per cent of its shares in HCB to "an entity that the Mozambican state may indicate".
That would leave Portugal with 10 per cent, "and in due time Portugal will take the decisions it must take about this matter", the Minister added.
Mozambique has benefitted more than expected from the deal thanks to a factor quite outside of its control - the exchange rate of the US dollar. Setting the price for the HCB shares in dollars has proved very useful, given the sharp fall of the US currency against Portugal's currency, the euro.
When the main agreement on Cahora Bassa was signed between Guebuza and Portuguese Prime Minister Jose Socrates in Maputo in October 2006, 700 million dollars was worth about 550 million euros. Today it is worth slightly more than 470 million euros.
This exchange rate fluctuation has cost Portugal around 80 million euros.
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