Moz to boost dam's capacity

2004-02-20 20:12

Lisbon - Mozambique will boost the generating capacity of its giant Cahora Bassa hydroelectric dam by 70% if the sale of Portugal's controlling stake in the plant's holding company goes ahead, an official from the southern African nation said Thursday.

Sergio Vieira, the director of the planning office of the region of Zambeze where the dam is located, told Portuguese news agency Lusa that Mozambique would install new turbines at the project which would add 1 540 megawatts of annual production capacity.

The massive dam, located on Mozambique's Zambezi River, currently produces 2 200 megawatts of power annually, he said.

Mozambique sells roughly 60% of the power currently produced by the dam to neighbouring South Africa.

Portugal holds an 82% stake in Hidroelectrica de Cahora Bassa (HCB), the dam holding company, while Mozambique holds the remaining 18%.

Lisbon built the hydroelectric dam in the 1960s and 70s when the country was still a Portuguese colony.

But earlier this month Portugal, following lengthy negotiations, agreed in principle to sell Mozambique a controlling stake in HCB.

Portuguese Foreign Minister Teresa Gouveia told a news conference in Lisbon on February 9 that Portugal, Mozambique and South Africa had until the end of March to take a final position on the future of the dam.

Artificial lake

Vieira, who was speaking in China where he was meeting with local businessmen, said Portugal and Mozambique were in negotiations over the price to be paid for the stake.

The dam, one of the largest civil engineering projects ever carried out in Africa, has created a 2 000 sq km artifical lake which stretches to the point where the borders of Mozambique, Zambia and Zimbabwe converge.

Lisbon says the dam holding company still owes Portugal about $2.3bn related to the construction of the project.

Portugal is seeking guarantees from Mozambique that the debt will be paid in its negotiations over the sale of its stake in HCB.

Lisbon reportedly only agreed to cede control of the dam after Mozambique agreed to raise the tariffs that HCD charges South African electricity company Eskom for the power from the plant.

The price paid by Eskom to HCB has for years been a major stumbling block in negotiations between Portugal and Mozambique over the future of the dam.

Eskom, the dam's biggest customer, has up till now been reluctant to pay market prices for power produced at Cahora Bassa.

- AFP