Mozambique Oil & Gas: Finance minister defends loan guarantee for ENH

The Minister of Economy and Finance, Adriano Maleiane, on Monday tried to persuade the Plan and Budget Commission (CPO) of the Mozambican parliament, the Assembly of the Republic, that the country needs to return to the international capital markets to borrow a further two billion US dollars to cover the participation of the National Hydrocarbon Company (ENH), in the liquefied natural gas (LNG) projects in the Rovuma Basin, off the coast of the northern province of Cabo Delgado.

There are two consortia developing LNG in the Rovuma Basin, one headed by the American company Anadarko Petroleum, and the second by the Italian energy company, ENI. ENH participates in both consortia, with holdings of 15 per cent and 10 per cent respectively.

But now ENH needs to put money on the table – which means borrowing it from banks, and that will only be possible with a government guarantee.

The last time any such guarantees were issued, by the previous government, headed by President Armando Guebuza, it was for three security-linked companies, Ematum (Mozambique Tuna Company), Proindicus and MAM (Mozambique Asset Management), which are now bankrupt and utterly incapable of servicing their debts.

Some deputies on the CPO were sceptical about the ENH request for government loan guarantees, fearing repetition of the Ematum, Proindicus and MAM loan scandals.

But, according to a report in Tuesday’s issue of the independent daily “O Pais”, Maleiane attempted to calm them, assuring them that this time there would be no risk for the state. He said that a Special Purpose Vehicle (SPV) will be formed, belonging to all the companies involved in the consortia, and would seek the loans in the name of all of them.

Just as the other consortia partners were receiving guarantees from their owners, so the Mozambican state, as the owner of ENH, had to give a sovereign guarantee.

Maleiane also repeated his pledge that this month the government will begin to pay off its debts to private suppliers of goods and services. These debts amount to about 20 billion meticais (about 334 million dollars), and some of the money has been owing for a decade. Source: AIM