Company sees no risk in new sovereign guarantee

The chairman of the Board of Directors of Mozambique’s National Hydrocarbons Company (Empresa Nacional de Hidrocarbonetos – ENH) said on Thursday that the US$2 billion guarantee that Mozambique is to issue to enter the gas business does not entail risk.

“There are rumours that it is another state debt, as if it were something that will increase the financial debt, but it is not true. Everything has been well studied and everything is taken care of,” Omar Mithá told reporters on the sidelines of a sector meeting in Maputo.

The ENH leader reiterated yesterday what the Deputy Minister of Energy and Mineral Resources, Augusto de Sousa, said in an interview with Lusa last week when he announced that the guarantee would have a term of five years.  The issue regards ENH’s stake in the Anadarko-led consortium that will exploit natural gas in Area 1 in the Rovuma basin in the north of the country. ENH’s share will be financed by loans and the lender requires a guarantee.  For Mithá, the sovereign guarantee is “only a formalisation that financial institutions ask of each of the investors”. After the construction of the plants, “this guarantee falls away”.

“During the construction period, the project has no assets, and what financial institutions are saying is that they need a guarantee. This is a guarantee only for the construction period, in case materially adverse condition arise, which I think is rare,” Mitha said.  This is different to what happened in the case of hidden debts, Augusto de Sousa told Lusa, referring to a case under investigation by the justice system and in which the country remains unaware of the fate of US$2 billion obtained on the basis of guarantees issued by the government, undisclosed to parliament and international partners, in 2013 and 2014.  The issue of the new guarantee in favour of ENH is foreseen in the proposed State Budget for 2019, which will be discussed by the Mozambican parliament before the end of the year.