The International Monetary Fund (IMF) said there has been 'good progress' in seeking financing for the majority ownership transfer of the Cahora Bassa hydro plant in Mozambique.
As part of its review of Mozambique’s Poverty Reduction and Growth Facility (PRGF), the IMF noted that the local authorities has re-iterated their commitment to using non-recourse finance to acquire the power plant.
Portugal has agreed to transfer controlling ownership to Mozambique, giving the country a stake of 85% in the 2075MW hydro project on the Zambezi river. Mozambique had previously held a stake of 18% to Portugal’s 82%, and in return for the transfer will pay Portugal about US$950M.
The project is held by the company Hidroelectricade Cahora Bassa, and much of the electricity generated is supplied to South Africa. A few years ago alstom refurbished the plant’s five units, and each now has an installed capacity of 415MW.
For much of the 1980s, and in effect the early life of the asset, the plant was out of action due to the civil war in Mozambique, though it was well guarded. The plant was effectively stranded as opposing groups destroyed the transmission lines, and then the generating units deteriorated. It wasn’t until the mid-1990s that plans began to be explored to recover the asset.
Construction of the Cahora Bassa scheme started in 1969 and was completed in 1976, just after the colony had achieved independence from Portugal. Negotiations for the transfer of the project began before Mozambique became independent.
The IMF said use of non-recourse finance was important to keep down the government’s liabilities, and to help ensure accountability and transparency. It added that the principle would apply to all future infrastructure projects.
Satisfactory completion of the sixth, and final, PRGF review releases US$2.4M from IMF to Mozambique.
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