Stanley Ho’s Geo Capital to take stake in Cahora Bassa dam

14 July 2006

Lisbon, Portugal, 14 July – Mozacapital, accompany linked to Geo Capital owned by Macau businessman Stanley Ho, is expected to take a stake in the Cahora bassa Hydroelectric Dam (HCB), which South Africa will not be a part of, the Africa Monitor newsletter reported.

The company, headed by manager Ferro Ribeiro, is included amongst the potential Mozambican shareholders in Southern Africa’s largest hydroelectric dam, to which the Mozambique government is expected to attribute some 30 percent of its capital, the newsletter said.

As part of the transfer agreement for the dam signed between Portugal and Mozambique, the Mozambican state will increase its stake to 85 percent, but plans to keep around 55 percent, directly or through the state electricity company, EDM.

Portugal, possibly through electricity company EDP, will retain the remaining 15 percent, the same publication said.

South Africa will not take a stake in HCB’s capital and its electricity company Eskom, which is the main customer for energy produced at the hydroelectric dam located at Songo, in the Zambezi valley, in Tete province.

South Africa’s plan to take a stake was turned down for strategic reasons, allowing Mozambique to have an advantage over its neighbor, which currently faces serious power supply problems.

Also according to Africa Monitor, the Mozambican government has already decided on the model for payment of the almost US$1 billion debt owed to Portugal in return for transferring control of the dam.

Of the total debt, US$250 million will be covered with funds from HCB itself and the remaining US$750 million using outside credit, guaranteed by future company revenue.

The financing banking syndicate has not been entirely established, but will include UBS, Credit Suisse First Boston and Rothschild.

Mozambique attempted to obtain less costly financing from the World Bank, but was turned down as such a loan would have gone against its policy of reducing the weight of the State on the economy of developing countries. (macauhub)

MACAUHUB FRENCH