Portugal awaits EU authorization to sign Cahora Bassa transfer

24 April 2006

Lisbon, Portugal, 24 April – Portugal is waiting to receive authorization from the European Union (EU) to carry out the transfer process of the Cahora Bassa hydroelectric dam (HCB) to Mozambique, and the final agreement is expected to be signed in May, Portuguese weekly newspaper Expresso reported.

According to the paper, the Portuguese prime minister, José Sócrates, is expected to travel to Maputo in the first half of May, just as soon as the operation has been approved, to sign the final agreement for transferring the dam located on the Zambezi River.

The agreement was due to have been signed last week, but the Portuguese government had not yet received a Eurostat report on the accounting of the almost US$2 billion difference between the amount of debt HCB owes Portugal that is to be pardoned and the amount to be paid, US$ 950 million.

The operation going ahead depends on whether Brussels ensures that the figure will not be accounted into Portugal’s public deficit, which if it was, would leave Portugal with a budget deficit and subject to the application of EU sanctions under the terms of the Stability and Growth pact (SGP).

The memorandum of understanding for transferal of HCB outlines that Portugal will keep a 15 percent stake in the company, with the status of “strategic partner,” and Mozambique would have an 85 percent stake.

The agreement outlines that HCB will pay Portugal US$250 million right after it is signed.

The remaining US$750 million will be provided by a banking syndicate that has already been established, according to a recent statement by Mozambican Prime Minister, Luísa Diogo.

At the end of 2006, when payment has been concluded, the company’s management will be handed over to Mozambique. (macauhub)