Mozambique: $900 million for arms? – By Joseph Hanlon

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Mozambique: $900 million for arms? – By Joseph Hanlon

3:27 CAT | 12 Oct 2016

More than half of the more than $2 billion in secret loans around Ematum and maritime security have never been explained. Africa Confidential (7 Oct), which has been unusually well informed on the secret debt, reports that $900 million of the secret loans has been passed on to companies owned by members of the Frelimo elite to buy assault rifles, armoured cars and other weapons from Israel and elsewhere for the escalating war against Renamo. There are indications of substantial commissions. The report is buried in a somewhat confusing article, which has been largely reprinted by Rhula (30 Sep to 7 Oct).

Sell gas in advance to pay debt?

As predicted here in June, Mozambique will try to sell in advance large parts of its 15-20% share of the gas to be produced in Cabo Delgado in order to pay off the secret debt. Ragendra de Sousa, the recently appointed Deputy Minister of Industry and Trade, told the Portuguese newspaper Publico (30 Sept) “If we sell the gas in advance, the receipts will be far greater than the debt.”

Mozambique is already committed to selling part of its gas to pay for its multibillion dollar share of the gas liquification plants. This and de Sousa’s proposed sale, for example for gas for a pipeline to South Africa, will take all of Mozambique’s share for several years. That means it will be at least a decade before Mozambique gains any revenues it could use.

De Sousa said the debt of the Guebuza government must be accepted, but renegotiated. “What the previous government did, the new government must take on,” he said. “I argue that the country has to honour its commitments, but we do not have to honour the face value [of the debt] … We must renegotiate the terms and conditions.”

“We have to see the ability that we have to pay and the time. I go to the lender and say that I can not afford to pay, either you renegotiate or we default. But then I say that the default is also yours, because you did not do due diligence. What will financial agencies Credit Suisse and the Soviets [VTB Group] say? We are all in the same boat, with very small margins. We have to pay, but they also need that Mozambique not say to their shareholders that they were not professional,” he said.

By: Joseph Hanlon

Source: News Reports & Clippings