Mozambique Oil & Gas: “ENH needs US$2.8 bi to join Anadarko project” – IMF

Anadarko--Mozambique
The field was expected to start production by 2019. Indian companies have made an investment of .5 billion in the African country.

The Mozambican government could risk a further US$2.8 billion debt to enter Anadarko’s natural gas project. The IMF indicates that the country’s indebtedness is unsustainable.

The Mozambican government may be forced to borrow up to another EUR2.3 billion to secure the participation of the National Hydrocarbons Company (ENH) in Anadarko’s natural gas project, the IMF said.

According to financial news agency Bloomberg, citing a report prepared by International Monetary Fund (IMF) experts, which will be discussed Friday by the Fund’s management, this is another problem for the country’s negative financial situation through.

ENH, according to the IMF’s assessment, would then have to secure funding of  US$2.3 billion to participate in the $ 25 billion investment that Anadarko is preparing to operate liquefied natural gas.

Some of the largest public companies have left unsustainable debt and may need a debt forgiveness or restructuring, read the Bloomberg article, which does not cite the report directly.

The IMF’s assessment suggests that the country’s indebtedness, whether domestic or foreign, is unsustainable until natural gas projects start to be profitable for the country, but the government sees this postponement as a viable option.

Against this backdrop, IMF experts anticipate only 2 to 2.5% growth in gross domestic product in the medium term, accelerating to 10% in 2023 due to gas production.

The gap in public accounts arose in 2013 and 2014, when three public companies with front businesses, according to an international audit, contracted debts of about two billion dollars, based on state guarantees signed in the absence of law, from donors and national authorities in what became known as the hidden debt scandal.

The fate of most of the money remains to be ascertained, justifying companies that it is a matter of national security.

Among the creditors, there are 727.5 million dollars worth of debt securities, which have already accepted a reduction in payments and an extension of maturity, which led directly to the downgrade of Mozambique’s default rating, or financial default.

Holders of these securities (which result from the exchange for Ematum bonds) refuse to be equated with banks and investors who have lent the remaining $ 1.4 billion to public companies Mozambique Asset Management (MAM) and Proindicus.

The banks that lent the money were Credit Suisse and Russia’s VTB, whose chairman Andrey Kostin told Bloomberg a month ago to meet with Mozambican President Filipe Nyusi “to convince him to negotiate” the payment of the country’s debt.

The rating agency Standard & Poor’s (S & P) has estimated as early as February a reassessment of Mozambique’s “rating” for foreign currency issues, after the restructuring is completed, although the deadline is not yet clear. ”

S & P maintains the country at the lowest rating level, ie SD (‘selective default’) due to the default on the remuneration of foreign currency securities, placing it at the B- level for sovereign debt issues local currency and B for the long term. source:Lusa

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