Former Defence
Minister Alberto Chipande has come to the defence of the 850 million US dollar
loan that the Mozambican Tuna Company (EMATUM) contracted on the Eurobond
market in mid-2013.In an interview
on Monday with Radio Mozambique, Chipande, who enjoys great prestige as the man
who fired the first shots in Mozambique’s war for independence, claimed that
the EMATUM debt is sustainable.He believed
that the creation of EMATUM was part of “the strategies for the economic
liberation of Mozambique”, and that the loan also contributed to the defence of
Mozambican territorial waters.The stated
purpose of the loans was to purchase 24 fishing vessels and six patrol boats
from a shipyard in the French port of Cherbourg.Chipande
stressed the need to defend Mozambique’s maritime borders. “This all has to be
defended”, he declared. “We Mozambicans have to seek all possible means to
survive as a sovereign country”.Previously tuna
fishing in Mozambican waters was undertaken almost exclusively by foreign
vessels, and the only benefit Mozambique derived was the payment of licence
fees. It is hoped that the EMATUM loan will be the basis for a thriving
Mozambican tuna fishing and processing industry.Chipande argued
that people should ignore accusations that some of the EMATUM money was being
stolen. “What was stolen?”, he asked. “The government decided to resort to
indebtedness, and nowadays money is not given away. We had to give an
undertaking and so we gave that undertaking”.The State
needed tuna fishing boats and patrol vessels, and so “the debt is sustainable
for the interests defined by the state”.But among the
voices raised querying the sustainability of the debt are the consultancy
company Ernst & Young, which audited the EMATUM accounts, the Minister of
Economy and Finance, Adriano Maleiane, and former Prime Minister Luisa Diogo.The EMATUM
accounts for 2013 and 2014, published in May, painted a bleak picture of the
company’s finances. The accounts showed that in 2014 EMATUM made a loss of over
850.5 million meticais (about 24.9 million US dollars). The accumulated losses,
from 2013 up to December 2014 were 1.17 billion meticais. EMATUM’s own funds
were thus deeply in the red, at minus 1.16 billion meticais.This situation
clearly worried Ernst & Young. In its audit report, it pointed out that the
continuity of EMATUM’s operations “is strongly dependent on a capital structure
duly supported by the shareholders and/or by financial institutions, as well as
on profitable operations in the future”.Speaking in the
country’s parliament, the Assembly of the Republic, on 18 June, Maleiane
revealed that the loan carries the very high interest rate of LIBOR (London
Inter-Bank Offered Rate) plus 6.5 per cent. It is repayable over seven years,
with a two year grace period which is about to expire.Maleiane
certainly did not believe the EMATUM debt was sustainable and wanted to
re-negotiate it. The debt had been split in two – the fishing assets, valued at
350 million dollars, were now the responsibility of EMATUM itself, while the
state would repay the other 500 million dollars.“Seven years is
a short period to repay 500 million dollars, even with a two year grace
period”, said Maleiane, “particularly at a high interest rate. We are trying to
negotiate a longer repayment period and a lower interest rate, and our
partners, including the IMF, agree with us”.
Luisa Diogo,
interviewed by the independent weekly “Savana”, expressed serious concern at
the country’s level of indebtedness and particularly the EMATUM debt.“Something went
wrong in the EMATUM study, in structuring the debt at such a high level,
because it’s not a small debt. There was a failure in structuring the debt”,
said Diogo.“When we accept
a debt, we must always bear in mind what are the sources for paying it”, she
said. “We must always pose the worst scenario, which is when the company is
unable to pay. For a company to pay a particular sum, it must be structured in
a particular way, and know how much it has to produce, if the debt is to be
paid”.Diogo said that
if, for example, a company has to pay 200 million dollars a year in debt
servicing “then it must produce at least 700 to 800 million dollars a year”.
Yet the most optimistic forecast (from the government) is that when the EMATUM
fleet is fully operational, its fishing activities will bring in revenue of
only 196 million dollars a year.Furthermore,
there has still been no detailed explanation of what the loan is being spent
on. The initial estimate of how much the 30 boats built n Cherbourg would cost,
according to the French press, was 200 million euros (about 220 million
dollars). So what is the purpose of the remaining 630 million dollars of the
loan?Speaking in
parliament in late 2013, the then Fisheries Minister, Victor Borges, said the
money was for such items as radars, satellite communications, on-shore installations,
transfer of technology, licence fees, training, and running costs and the
payment of interest on the loan for the first year.But he gave no
detailed breakdown of these costs, failing to tell parliament how much money
was to spent on each of these items. Until such an itemized breakdown is made
available, suspicions that there is something illegitimate about the EMATUM
loan will continue to haunt the government.
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