The agreement on handing back the majority of the equity of Hidroeléctrica de Cahora Bassa (HCB, dominated by Portuguese interests) to Mozambique could come into effect just before the Frelimo (ruling) party conference in November. At least, that is the idea of the Portuguese government which would like to pay homage to President Armando Guebuza, who is also the leader of Frelimo.
But that is not the end of the matter, because Eurostat, the statistics organisation of the European Union, has not yet given the green light for this agreement which had already been signed between Portugal and Mozambique in November 2005.
A team from Eurostat recently went to Lisbon to find out how the Portuguese treasury would integrate the operation to hand HCB back to Mozambique into its accounts. The reason is that under the terms of the agreement, Mozambique would pay $950 million; at the same time cancelling 62% of its 2.5 billion euro debt, corresponding to the sum spent by the Portuguese since the hydro-electric dam was built. Hence, the Portuguese public deficit could be considerably deepened, at least in accounting terms, and so not comply with EU rules. Brussels is therefore looking for an alternative way of including this debt cancellation operation in Portugal’s national accounts. However, the speed of the EU’s working could make settling this matter by November difficult indeed.
The Indian Ocean Newsletter - 30.09.2006