Pipeline funded by China supports Mozambique’s industrialisation strategy

11 April 2016

The investment of US$6 billion in the Rovuma/Gauteng pipeline, the largest ever Chinese investment in Mozambique, will support Mozambique’s industrialisation strategy and strengthen the Chinese presence in the region, according to recent analyses collated by Macauhub.

Announced in March, the feasibility study of the 2,600-kilometre pipeline will be carried out by the China Petroleum Pipeline Bureau (China National Petroleum Corp. group, a shareholder in the Area 4 block of the Rovuma basin) and, once the investment decision has been made, 70 percent of the funding will be provided by Chinese financial institutions.

Aubrey Hruby, of the Atlantic Council Africa Centre, said Chinese involvement makes the project a winner for the three parties involved.

“It is a gain for China because the Chinese contractors get the business, it is a gain for South Africa and Mozambique because they secure the gas they need and it is a win for Zimbabwe and Zambia, because they also need energy,” said the Hruby, quoted by the Interfax news agency.

The consortium led by CPP includes South Africa’s SACOIL as well as Mozambique’s ENH and Profin and will compete with another, called Gasnosu, part of South Africa’s Gigajoule and supported by the state electricity company of the neighboring country, Eskom .

The African Renaissance Pipeline in its present design provides branches to the two neighbouring countries, allowing them to access an important energy source, while Mozambique gets revenues from gas sales as well as being able to use it in industrialisation projects across the country .

At the forum for China-Africa Cooperation (FOCAC) held in December 2015 in Johannesburg, China pledged to triple to US$60 billion in concessional and commercial loans to African countries by 2018.

Charlotte King, of the Economist Intelligence Unit, says that the project is in line with China’s overall strategy for Africa, with the aim of securing export markets, in this case for engineering, and expanding geopolitical influence.

China has taken on an important role among Mozambique’s main foreign partners and most analysts expect that role to increase.

After the inauguration of Zimpeto Stadium, also funded by China and the first major sporting facility built in post-independence Mozambique, attention is now focused on the Catembe bridge in Maputo, due to be inaugurated in 2017. The bridge will be 3 kilometres long and will be one of the largest infrastructures of its kind in Africa and the new port of Beira, Mozambique’s second largest city,

Construction of the new port of Beira began in September 2015, at the hands of the China Harbour Engineering Co. The port is seen as key to revitalise the country’s fishing industry and will serve the entire production chain, including refrigeration and export of processed products.

The Maputo Circular Road is being built by the China Road and Bridge Corporation, which is also responsible for the Catembe Bridge project and the Export-Import Bank (Exim) of China also allowed for the completion in 2012 of the new terminals of Maputo international airport. (macauhub/CN/MZ)