Mozambique: 'We Negotiated With Portugal, Not Eurostat' - Guebuza

Bucharest — Mozambican President Armando Guebuza has reiterated that, when, in November 2005, the Mozambican government signed a memorandum of understanding over the future of the Cahora Bassa dam, it was negotiating with Portugal, and not with the European Union.

Guebuza was speaking to AIM in Bucharest, where he was attending the Francophone summit, following reports from Lisbon that the deal over Cahora Bassa may have suffered a reverse, after a team from Eurostat, the EU's statistical agency, had requested more information on the agreement.

The dam operating company, Hidroelectrica de Cahora Bassa (HCB), is still 82 per cent owned by the Portuguese state, with Mozambique holding the remaining 18 per cent. The November 2005 memorandum sought to reverse this: Mozambique would end up with 85 per cent of HCB, and Portugal with 15 per cent: in effect, Portugal agreed to sell 67 per cent of HCB to Mozambique, for a price of 950 million dollars.

Eurostat, however, is investigating what effect this may have on Portugal's budget deficit.

In the real world, it can only improve Portugal's financial situation, since Lisbon stands to gain 950 million dollars rather than nothing at all. But for statisticians, it looks as if an asset once valued at about 2.5 billion dollars has been written down for less than half of that amount.

That looks, not like a simple sale of shares, but like debt forgiveness, and under EU accounting rules, debt forgiveness enters the books as a transfer of capital, and thus (on paper, though not in reality) automatically worsens the budget deficit.

The Mozambican government, which had no reason to suspect that Portugal was bending any EU rules, assumed that, after the memorandum of understand, a final agreement on HCB wold be signed, and the dam would be in Mozambican hands by the end of 2006.

Guebuza told AIM "We negotiated with Portugal and not with Eurostat. What's going on now is between Portugal and Eurostat, and we have nothing to do with that".

Asked whether the Mozambican government is worried at the delay, Guebuza said "We have expressed our concern that the matter should be solved as quickly as possible, and the Portuguese government knows this perfectly well".

Nowhere in the memorandum of understanding is there any mention of Eurostat, or any hint that the transfer of HCB depends on anybody other than the Portuguese and Mozambican governments.

Speaking of Thursday's admission of Mozambique into the International Francophone Organisation (OIF) as an observer, Guebuza said this showed that Mozambique "is a partner worth having, we're in many organisations, and we'll bring added value to the OIF".

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