Mozambique is paying nothing in relation to ENH guarantees – Maleiane

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Mozambique is paying nothing in relation to ENH guarantees – Maleiane

8:57 CAT | 23 Apr 2021

File photo: Noticias

Mozambique is paying nothing in relation to the guarantees issued in favour of the National Hydrocarbon Company (ENH) participation in the gas project temporarily suspended after the attack on Palma, the government has announced. Nor does it expect to.

“I would like to reassure you. At the moment, the state is not paying anything, directly or indirectly related to the issuance of the guarantee in favour of ENH,” Minister of Economy and Finance Adriano Maleiane told parliament on Wednesday.

Deputies had asked how much the state would be paying for ENH’s participation in the gas project.

Maleiane was assessing the risk of the Mozambican state being executed due to the guarantee of around US$2.2 billion (€1.83 million) in support of loans taken out by the state-owned company to guarantee its 15% share in the LNG project consortium led by Total.

The minister reaffirmed that the guarantee was intended to cover the construction period, and that the infrastructure itself, once completed, would serve as collateral for the reimbursement.

“This is the reason why we are not paying anything, because it was not necessary to issue a guarantee via the banking system, but in the sense of giving confidence. It is as if it were a letter of commitment issued by the state, which is why it is called a ‘letter of sovereign guarantee’,” Maleiane explained.

In this guarantee the liability is not direct, “unlike the others issued by the state where [the liability] was direct”, he said, in an allusion to the sovereign guarantees related to the ‘hidden debts’ contracted without parliament approval between 2013 and 2014, amounting to €2 billion, and which have given rise to several arrests and legal proceedings.

The completion of the gas liquefaction plant in Cabo Delgado was scheduled for 2025, a date that may slide until 2027, Maleiane admitted, given the uncertainty caused by the indefinite suspension of work following rebel attacks in Palma district, where the project – the largest private investment in Africa, worth €20 billion – is taking shape.

On the violence in Cabo Delgado, the minister said that the Government is working to restore order and that “everything is being done to make the [gas] work progress”.

Armed groups have terrorised Cabo Delgado since 2017, with some attacks claimed by the jihadist group Islamic State, in a wave of violence that has already caused more than 2,500 deaths, according to the ACLED conflict registration project, and 714,000 people displaced, according to the Mozambican government.

The most recent attack, on March 24, was carried out against the town of Palma, causing dozens of deaths and injuries in numbers yet to be ascertained.

Mozambican authorities regained control of the town, but the attack led oil company Total to indefinitely abandon the main construction site of the gas project scheduled to start production in 2024 and on which many of Mozambique’s expectations for economic growth in the next decade are based.

Source: Lusa