Maputo — The Mozambican and Indian governments signed an agreement in Maputo on Monday, under which the Indian Exim Bank will provide a soft loan of 25 million dollars for rural electrification in the northern provinces of Cabo Delgado and Niassa, and the central province of Manica.

The loan is to be repaid over 20 years, at an interest rate of 1.75 per cent, and with a grace period of five years.

The agreement was signed by Mozambique's National Treasury Director, Antonio Laice, and the chairperson of the Board of Directors of the Exim Bank, Venkat Subramanian, and witnessed by Indian Foreign Minister S.M. Krishna, who is on an official visit to Mozambique.

At the ceremony Krishna took the opportunity to announce further Indian aid of four million dollars for technical capacity building in coal mining, and five million dollars for the education and health services.

"We are satisfied with the current bilateral relations between our countries, and we are looking for other areas for investment, so as to increase our cooperation", said Krishna. "Mozambique is a country rich in coal resources, and the question of energy is critical for the development of India. Hence our cooperation is prioritizing the energy sector".

For his part, Mozambican Foreign Minister Oldemiro Baloi said that the Monday agreement indicates the quality of the cooperation between the two countries.

India first extended lines of credit via the Exim Bank to Mozambique in 2003. So far these loans amount to 140 million dollars. The money has been used to finance the opening of 800 boreholes for water supply in Nampula and Zambezia provinces, rural electrification in Gaza, Inhambane, Nampula and Zambezia, support for peasant farmers in the full use of coconut, and the establishment of the Maluana Technology Park at Maluana, in Maputo province.

Krishna is accompanied by a delegation of 26 Indian business people, who on Monday attended a seminar with their Mozambican counterparts organised by the Confederation of Mozambican Business Associations (CTA).

The CTA President, Salimo Abdula, told the seminar that Mozambican businesses are interested in the transfer of Indian know-how and technology.

"We hope that Mozambican and Indian businesses establish partnerships that bring added value to the processing of raw materials, improve agricultural productivity, and exploit our precious stones, just to cite a few examples", said Abdula.

"We have precious that are being smuggled", he added. "India has the know-how in polishing and adding value to the stones, so that they are worth more as exports. This is important for the Mozambican economy and for Mozambican labour".