Mpanda Nkuwa hydro dam approved in 2007

Mozambique’s huge new Mpanda Nkuwa hydroelectric dam is to take at least a decade to be built and start operating, the country’s deputy minister for energy and mineral resources, Augusto de Sousa, told Lusa in an interview.

“Quite frankly, Mpanda Nkuwan will go on until 2028 or 2029,” he said. “Before that it isn’t going to happen.”De Sousa’s comments came after Mozambique’s president, Filipe Nyusi, revealed in August that two state enterprises, Electricidade de Moçambique (EDM) and Hidroeléctrica de Cahora Bassa (HCB), were in charge of reviving the dam project.The minister also said that HCB “could go to the market and obtain financing to implement the project” but that there was still work to carry out beforehand.He said the country was studying “all past documentation” to verify that there is nothing “that penalises the government” since the construction plan was approved in September 2007. “We are going through all the past documentation,” he said, verifying that “there is nothing that penalises the government”, since the construction plan was approved in September 2007 and has passed through the hands of several partnerships from then, without being implemented.After that, there are several other deadlines to take into account, the deputy minister said: five years to build the dam, the power plant, two years for structuring the project (which includes transport lines or energy sales agreements), plus a few more to solve any pending issues.Put together, these will take the implementation schedule all the way to 2028 or 2029.

“I do not see [the project] happening sooner than that,” de Sousa said. Indeed, the dam will be ready just as Mozambique begins extracting natural gas from the large offshore reserves in the north of the country, part of which will be used to produce electricity. But even so, De Sousa says, the construction of Mpanda Nkuwa is justified.The Electricity Infrastructure Development Master Plan foresees electricity demand increasing eight-fold over the next 25 years to 8,000 megawatts. More than half that will be produced from natural gas, but the dam will help “respond to demand” and will contribute to “the diversification of energy sources.”

“Until five years ago, Mozambique was 100% hydro” with respect to electricity sourcing. Today it has 30% natural gas (from the Sasol project in Inhambane) and 70% hydro, “a large part of which originates from the Cahora Bassa dam”.

Limitations on energy production at Cahora Bassa due to drought last year were a warning sign of the need to diversify the range of energy sources, the deputy minister concluded.

Group builds aerodrome in Afungi

Portuguese group Gabriel Couto has been hired by US-based Anadarko Petroleum to build an aerodrome in Afungi, northern Mozambique, the director of the construction group said.

Tiago Couto told Portuguese newspaper O Minho that the future aerodrome will be built close to the city of Palma, in Cabo Delgado province, and will support the development of the natural gas exploration projects of the Area 1 and Area 4 blocks, the latter to be operated by Italian group ENI.

The contract covers the design and construction of a 2,300 metre runway plus a terminal for 150 passengers and other buildings to support the runway.The total term of the project is 21 months, comprising two different phases. The first phase will include the construction of a 1,600-metre-long runway, designed to operate an Embraer ERJ-145 aircraft, a parking area for four aircraft and a helicopter, as well as construction of a passenger terminal, access roads and parking.The second phase will include the extension of the runway to 2,300 metres, including the provision of navigation equipment, access ladders for aircraft, support trailers and luggage transport equipment.The director of the Gabriel Couto group did not disclose the value of the contract signed with US group Anadarko Petroleum.

The proposed restructuring

Banks that arranged billions of dollars of loans to government companies in Mozambique have proposed to restructure some of the now-defaulted debt, as the government of President Filipe Nyusi struggles to relieve financial pressure on Mozambique’s economy.Credit Suisse Group AG proposed the deal in recent weeks on behalf of a group of institutions holding a loan that the Swiss lender and Russia’s Bank VTB Group arranged in secret for a Mozambican government-owned company five years ago, people familiar with the matter said.The restructuring would swap the loan into new debt with interest payments tied to Mozambique’s future economic performance, one of the people said, and would help the banks move past an episode that attracted international scrutiny to their lending practices.

The first known proposal by the group comes as the country attempts to restore access to international capital markets. President Nyusi said in a September interview that Mozambique needs external investment to pay for basic services ranging from health care to water infrastructure.The debt crisis has become emblematic of the risks posed by a surge of borrowing conducted in recent years by African governments that fund managers say has left countries like Zambia and Ghana heavily indebted and at risk of default.

“We need to rebuild roads and we don’t have enough money,” President Nyusi said during the interview. “We need water, for example, for food security…we need financing.”

The debt is part of $1.2 billion the banks helped Mozambique borrow soon after the discovery of vast natural-gas reserves off its coast. Development of the gas fields has been slow and the country defaulted on the debt in 2017 after much of the borrowed funds disappeared.Foreign governments and financial institutions are unwilling to resume lending to the country until it normalises relations with its private creditors and the International Monetary Fund, which stopped lending (Photo Finance minister Adriano Maleiane). to Mozambique when The Wall Street Journal reported the existence of the undisclosed debt.   Mozambique offered in March to reduce some of its debt and delay repayment of the rest until as late as 2034, but creditors rebuffed the deal. The Credit Suisse group’s proposal, like a previous one by owners of a defaulted Mozambique bond, suggests swapping their claims into new securities that would pay increasing amounts when gas exports replenish the country’s coffers, a concept the Nyusi administration has consistently rejected.

“The proposal does not meet the requirements of the authorities and is not considered a viable basis for a solution,” said Ian Clarke, a lawyer for Mozambique at White & Case LLP.

A spokesman for Credit Suisse said the bank “has been working to develop a sustainable restructuring solution that accommodates the government of Mozambique’s requests and accounts for its current economic circumstances.” A spokeswoman for VTB declined to comment.

Mozambique is also deadlocked with the IMF, whose staff was angered by the hidden loans and has demanded answers about who was behind the deals and where the missing funds have gone.

The Securities and Exchange Commission and US Justice Department opened investigations of the deals in recent years.Mozambique’s Justice Department continues to look for the missing funds and is cooperating with the IMF and hopes the fund will resume lending as a sign of good faith and encouragement, President Nyusi said.

“We would like them to give us encouragement,” he said.

An IMF representative declined to comment. The IMF said in April that “full clarity on the use of the proceeds of the previously undisclosed loans contracted by three public companies will be critical to restoring confidence and encouraging private investment.”