Portugal and Mozambique fail to reach agreement on sale of 15 percent of Cahora Bassa Hydroelectric dam

30 November 2011

Lisbon, Portugal, 30 Nov – Portugal and Mozambique failed to reach agreement on the sale of the 15 percent stake the Portuguese state still owns in the Cahora Bassa Hydroelectric Facility (HCB), “for technical and financial” reasons, officials said Tuesday in Lisbon.

The announcement was made by Portuguese Prime Minister Pedro Passos Coelho and by Mozambican President, Armando Guebuza, at the end of the first Luso-Mozambican summit, and the agreement in which Portuguese companies REN – Redes Energéticas Nacionais and Mozambique’s Companhia Eléctrica do Zambeze would each take a 7.5 percent stake, was expected to be announced Tuesday.

Both pledged, however, that the matter would be resolved quickly because only these “technical issues” were left to be resolved.

The transaction started to be prepared more than a year ago, when in March 2010 the then Prime Minister José Sócrates visited Mozambique, noting that the 15 percent owned by state stake-holding company Parpública – Participações Públicas, SGPS would preferably be sold to REN and Companhia Eléctrica do Zambeze (which already owns 85 percent of HCB).

REN, in which the Portuguese state has a majority stake (51.1 percent), has always said that acquiring 7.5 percent of HCB would only make sense if it had a wider presence in Mozambique, specifically by being involved in the country’s power distribution grids.

Portugal’s stake in Cahora Bassa is far from being a comfortable asset as last June valued its stake in HCB at 77.5 million euros, with an accumulated loss for imparity of 62.7 million, of which 22.5 million was accumulated in 2011 alone.

Other than the HCB stalemate, the two governments signed a number of agreements, including those that give Mozambique access to the Portuguese historical, diplomatic and cartography archives and financial aid from Portugal to the Mozambican state. (macauhub)