Mozambique denies sale of Cahora Bassa stake to Zimbabwe electricity company

6 March 2006

Maputo, Mozambique, 06 March –Mozambique’s minister for industry, Salvador Namburete, has denied that Zimbabwe electricity company, ZESA Holdings, is to acquire a 25 percent stake ub the Cahora Bassa Hydroelectric dam (HCB).

Interviewed on Mozambican television Saturday, the Minister said he knew nothing about such a move.

Last week, the Zimbabwe Standard newspaper reported that ZESA was set to buy a 25 percent stake in HCB in order to increase its electricity production.

The line linking Cahora Bassa to Zimbabwe has a capacity to transport 500 megawatts of power but, according to the Harare press, ZESA is importing just 250 megawatts, an that figure has recently fallen to 170 megawatts.

News reported in the region has said that ZESA would have great difficulty in obtaining the funding needed for the acquisition, as it has only not gone bankrupt yet, because it is a state company.

According to ZESA chairman, Sydney Gata, the company owes the World Bank and other international organizations US$334 million, which is a growing debt due to teh company’s cash flow problems.

The solution to this problem would be to increase tariffs, which are the lowest in the southern African region, but Zimbabwe’s Central Bank rejected the increases proposed by ZESA fearing the effect they would have on the country’s inflation, which currently stands at 613 percent per year. (macauhub)