Maputo — The Mozambican government and the European Investment Bank (EIB) signed in Maputo on Thursday agreements for an EIB loan of 65 million euros (about 86 million US dollars) for the development of the Beira port and rail network in the centre of the country.

Of this sum, 42 million euros will go towards completing the reconstruction of the Sena rail line, which runs from the port of Beira to the coal basin of Moatize in the western province of Tete.

This sum supplements the 100 million dollars already disbursed by the World Bank and 48 million euros from the shareholders of the Beira Railroad company (CCFB) itself to rebuild the 665 kilometre line. The Sena line will be key to moving coal exports from Moatize to Beira. It was comprehensively sabotaged by the apartheid backed Renamo rebels during the war of destabilisation, and no trains have moved along it for quarter of a century.

The EIB component to the funding is intended to improve the track and maintain radio communications systems, and essential operational buildings, so that trains can move at at least 60 kilometres an hour along the entire length of the Sena line.

The other 23 million euros of the EIB loan is to finance emergency dredging of the Beira port access channel. This project has already been funded by Denmark and Holland to the tune of 13 million dollars.

The dredging of the 27 kilometre long channel, as well as the quays and the manoeuvring areas, will allow ships of up to 60,000 tonnes to enter the port.

The EIB loan is repayable over 20 years, at an interest rate of two per cent.

Finance Minister Manuel Chang, who signed the agreement for the government, said that the Sena line and the dredging of the port are important projects for the regional integration of the Southern African Development Community (SADC).

"With the implementation of these projects, good prospects open for the economic handling of cargo, and a reduction in congestion, allowing more ships to gain access to Beira", he said.

The money also meant that the reconstruction of the Sena line would be completed later this year,

For his part, the Deputy Chairman of the EIB, Plutarchos Sakellaris, said the agreement is a landmark in the relations between Mozambique and the EIB, as well as with the European Union

"The project will contribute significantly to improving the functioning of the port of Beira, and will reduce transport costs along the Beira Corridor", he said. "We hope that the project will have a great impact on the economic growth and development of Mozambique and of the region in general".

He pledged that the EIB will continue to support the Mozambican government in rebuilding the country's transport system, and in the fight against poverty.

After it is open to traffic, it is now estimated that the Sena line will be able to carry 12 million tonnes of coal a year. But the Brazilian company Vale intends to export 11 million tonnes a year, and Vale is only one of several companies with coal licences in Tete. Most prominent among the others are Riversdale Mining of Australia, and Coal India.

Since the Sena line alone cannot deal with the exports of all these companies when their mines are in full production, alternatives have been sought. Among the ideas mentioned are to float coal on barges down the Zambezi, and to build a new railway across southern Malawi, that would link up with Mozambique's northern rail system and the port of Nacala.