Maputo — The Mozambican state on Monday formalised the sale of the assets of the glassware companies Vidreira and Cristalaria to a local investor who has promised to resume production within a year.

The buyer is the company SONIL Mocambique Lda, which has agreed to pay 3.1 million US dollars to acquire Vidreira and Cristalaria.

Vidreira was the sole company producing bottles and other glass containers in Mozambique under colonial rule. After independence in 1975, it was nationalized, but went bankrupt during the war of destabilisation.

In 1996, Vidreira was sold to the Portuguese glassware company, Barboso e Almeida, which resumed production in 1998, and split it into two units - Vidreira for bottles, and Cristalaria for more delicate items. But the goods produced under Barboso e Almeida management were poor quality. Rather than improve the quality, the Portuguese company simply abandoned the factory in 1999, and production halted again.

"The signature of this contract marks the culmination of negotiations with SONIL, and the start of what we hope will be the reactivation of Vidreira and Cristalaria", declared Hipolito Hamela, the chairperson of the Institute for the Management of State Holdings (IGEPE).

"For us the important thing is that the factory should resume production and employ people, and not the value of the contract as such", added Hamela.

The terms of the agreement are that, in addition to the purchase price, SONIL will invest two million dollars in the factory (essentially in new equipment), and resume production by mid-2011. It is expected that the factory will employ around 200 people.

SONIL has interests in a variety of commercial activities, including tea and tobacco production and marketing. Recently it branched out into the packaging industry, and now intends to produce bottles and other forms of glass packaging.

SONIL intends to use natural gas as the fuel for Vidreira, an option that did not exist when Barboso e Almeida ran the company. The gas comes from the fields in Inhambane province operated by the South African petro-chemical giant, Sasol. The gas is sent by pipeline to the Sasol chemical plants in South Africa, but a branch supplies gas to the city of Matola, and Vidreira will become the latest Matola industry to switch to gas.

Following the resumption of production, an expansion phase should follow, involving further investment in excess of seven million US dollars.

Prior to the contract signed on Monday, Vidreia was one of dozens of companies wholly or partly owned by the state that are paralysed. IGEPE manages state holdings in 131 companies, and earlier this month Hamela told reporters that 27 per cent of them are producing nothing.

Santos Gonzaga, of the IGEPE board, told AIM that several potential buyers had expressed an interest in purchasing Vidreira, but only the SONIL proposal was regarded as viable.

SONIL wanted to resume glass production - its competitors had other ideas. Gonzaga said IGEPE had received proposals to turn the Vidreira premises into a shop, a warehouse, or even a church.

Mozambique is clearly in need of a reliable local source of glassware. For without any local glass production, breweries and soft drinks companies are obliged to import all their bottles from South Africa.