Wednesday, July 4, 2012

REN BECOMES CAHORA BASSA SHAREHOLDER

The Portuguese energy company REN (Redes Energeticas Nacionais) has announced the completion of 7.5 per cent of the shares of Hidroelectrica de Cahora Bassa (HCB), the company that operates the Cahora Bassa dam in the western Mozambican province of Tete.These shares were owned by the Portuguese state, and selling them to REN was part of the agreement reached between the Mozambican and Portuguese governments in April, during the visit to Maputo by Portuguese Prime Minister Pedro Passos Coelho.Via the company that manages Portuguese public shareholdings, Parpublica, the Lisbon government was to sell off the 15 per cent that it still held in HCB. REN was to pay 38.4 million euros (48.2 million US dollars) for its 7.5 per cent, while the other 7.5 per cent would be sold to HCB itself for 58.6 million euros.The deal was subject to the consent of a general meeting of HCB shareholders – consent that was easily obtained given that the only shareholders are the Mozambican and Portuguese states. The REN statement announced that the 7.5 per cent (slightly more than two million shares) was transferred to REN on Tuesday.REN also confirmed that it “intends to reposition itself in the Mozambican energy market, particularly in the energy transmission market”.This includes the possibility of taking part in the construction of CESUL – a new transmission line running from the Zambezi valley southwards to Maputo, and generally referred to as the “backbone” of the Mozambican electricity grid. REN hopes to be a “technological partner and services provider” for this project, through purchasing holdings in companies directly or indirectly owned by the Mozambican electricity distribution company, EDM.In exchange for its participation in CESUL, REN will gradually relinquish its holding in HCB. This is effectively a swap – REN will acquire shares in the EDM companies involved in CESUL, in exchange for its HCB shares. As a result, within two years Mozambique will own 100 per cent of HCB.CESUL is crucial to the future of energy supply in Mozambique, and the country’s exports of electricity, because the existing line, from Cahora Bassa to the Apollo substation in South Africa, cannot carry any more power. More power stations are planned for Tete. These include a second power station at Cahora Bassa (on the north bank of the Zambezi), a new dam at Mepanda Nkua, 60 kilometres downstream from Cahora Bassa, and coal-fired power stations that will use the lower-grade coal that mining companies do not export. This power can only reach its intended markets, in central and southern Mozambique, and in South Africa, if new transmission lines are built. The estimated cost of Cesul is about 1.8 billion US dollars.

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