Mozambique pays Portugal to win control of 2,040-MW Cahora Bassa

With funding from French and Portuguese banks, the government of Mozambique paid a US$700 million debt to Portugal and took control November 27 of the 2,040-MW Cahora Bassa hydroelectric project on the Zambezi River.

In a ceremony attended by leaders of Mozambique and a handful of neighboring countries, Mozambique President Armando Guebuza said assuming control of Cahora Bassa removed the last stronghold of 500 years of foreign domination over Mozambique.

The ceremony, broadcast on national television and reported by Mozambique media, was preceded by payment of the remaining US$700 million that Mozambique agreed to transfer to Portugal, which had owned 82 percent of the project, to Mozambique’s 18 percent. Mozambique previously paid its former colonial master US$250 million.

Completion of the deal gives Mozambique 85 percent of Cahora Bassa and Portugal 15 percent, to resolve a dispute over control of the project that has lasted since the early 1970s. (HNN 11/5/07)

In May, two European banks, France’s Calyon Bank and Portugal’s BPI, agreed to lend Mozambique the US$700 million so it could pay off the debt.

Mozambique news Internet site Canal de Mocambique reported Canadian utility Manitoba Hydro would take part in management of Cahora Bassa as an assurance to the financial backers. Manitoba Hydro’s international unit, Manitoba Hydro International, was commissioned by Nippon Koei of Japan in 2006 to serve as sub-consultant for a technical due diligence study for Cahora Bassa Dam, the hydropower plant, and a high-voltage direct current transmission scheme.

One of Cahora Bassa’s hydropower customers, neighboring Zimbabwe, announced it paid US$28 million to hydro project operator Hidroelectrica de Cahora Bassa. Zimbabwe’s official Herald newspaper quoted Zimbabwe Electricity Supply Authority saying the payment reduces its debt to HCB. (HNN 10/16/07)

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