SA writes down decade old Cahora Bassa loan

CAPE TOWN – South Africa has written down a multi-million rand loan, dating back 35 years, to the operators of Mozambique’s Cahora Bassa hydro-electric project, the department of minerals and energy said on Friday.

The 35 million rand loan to Hidroelectica de Cahora Bassa (HCB), guaranteed by Mozambique’s former colonial ruler Portugal, had grown through accumulated interest to 347 million rand, the energy department said in its 2003/04 annual report. The South African government put up the money in 1969 to set up a hydro-electric project on the massive Cahora Bassa dam in northern Mozambique to generate energy for Mozambique and South Africa.But a war of independence and following civil war hampered the project, which did not function between 1984 and 1999 as a result, making repayments impossible.”Over the past years, the department’s financial statements have indicated that the recoverability of this loan is doubtful, a view that still stands,” the department’s director-general Sandile Nogxina said.”To continue reflecting this amount in the books of the department at the current value of (347 million rand) would not be a fair representation of the financial status of the department.”The loan has been written down to one rand and has been tranferred to the department of trade and industry.”It needs to be emphasised that the writing down of the loan to one rand does not in any way negate the South African government’s creditor status in the Cahora Bassa project,” Nogxina said.Portugal, which owns a majority stake in HCB, has promised to speed up the return of the stake to Mozambique, which Portugual quit along with its other African colonies in the mid-1970s.-Nampa-ReutersThe South African government put up the money in 1969 to set up a hydro-electric project on the massive Cahora Bassa dam in northern Mozambique to generate energy for Mozambique and South Africa.But a war of independence and following civil war hampered the project, which did not function between 1984 and 1999 as a result, making repayments impossible.”Over the past years, the department’s financial statements have indicated that the recoverability of this loan is doubtful, a view that still stands,” the department’s director-general Sandile Nogxina said.”To continue reflecting this amount in the books of the department at the current value of (347 million rand) would not be a fair representation of the financial status of the department.”The loan has been written down to one rand and has been tranferred to the department of trade and industry.”It needs to be emphasised that the writing down of the loan to one rand does not in any way negate the South African government’s creditor status in the Cahora Bassa project,” Nogxina said.Portugal, which owns a majority stake in HCB, has promised to speed up the return of the stake to Mozambique, which Portugual quit along with its other African colonies in the mid-1970s.-Nampa-Reuters