Mozambique - Cahora Bassa Agreement 'A Second Independence'.

Cahora Bassa Agreement 'A Second Independence'.

Agência de Informação de Mocambique (Maputo)
November 30, 2005 Posted to the web November 30, 2005.
Maputo
Mozambicans regard the agreement on securing Mozambican control over the Cahora Bassa dam on the Zambezi as "a second independence", claimed President Armando Guebuza on Wednesday.
Giving his State of the Nation address to the Mozambican parliament, the Assembly of the Republic, Guebuza said that the Memorandum of Understanding on the future of Cahora Bassa, signed earlier this month between the Mozambican and Portuguese governments, was "a historic landmark".
Under the agreement the current shareholding structure, in which the Portuguese state holds 82 per cent of the shares in the dam operating company, HCB, and Mozambique holds the other 18 per cent, will be reversed.

Portugal is to be paid a total of 950 million US dollars, and Mozambique will hold 85 per cent of the company.
The agreement, Guebuza said, "expresses our concern to put our natural resources at the service of the development of our country and of the struggle against poverty".
In Mozambican hands, HCB "opens immeasurable vistas of exploiting this resource to the benefit of development programmes", he added.
The successful negotiations also gave a clear message of the attributes Guebuza wanted to see associated with his leadership - "determination, firmness and effectiveness".
The President admitted that the repeated increases in the price of liquid fuels, determined by soaring oil prices and the depreciation of the Mozambican currency, the metical, had affected the Mozambican economy.
He said the government had taken several measures to soften the blow: these included exempting kerosene, often regarded as the fuel of the poor, from fuel tax, and reducing tax on diesel used in agriculture, fisheries, mining and diesel-powered generators.
To give commuters a subsidised alternative to the relatively expensive minibus taxi services of private operators, suburban train services had been reintroduced in Maputo and Beira, and the vehicle fleets of public bus companies had been increased by repairing buses that had been off the roads.
Guebuza said a programme has been designed to introduce vehicles that run on natural gas, a fuel produced in abundance in Mozambique.

The programme was behind schedule, but a demonstration gas station had been set up in the southern city of Matola, and the first natural gas powered buses have been imported.
The metical exchange rate has proved highly volatile this year, which, the President said, showed how "sensitive our economy remains to internal and external shocks".
The currency ended 2004 trading at 18,800 to the US dollar, compared to an average rate of around 24,000 meticais to the dollar in 2003.

The 2004 appreciation reflected the weakness of the dollar rather than the strength of the metical, and it was widely believed that a market correction would take the metical back to 24,000 to the dollar.
In fact, the depreciation was much sharper than that, and in early November there were over 29,000 meticais to the dollar.
Guebuza attributed this largely to the higher cost of importing fuel, which is denominated in dollars - this had sparked off greater demand for hard currency and consequent pressure on the metical.

"The unfavourable evolution of world oil prices has worsened the vulnerability of small open economies, such as that of Mozambique, which depend totally on importing fuel", said Guebuza.
But he was optimistic that measures taken by the central bank to discipline the exchange market were having a positive effect.

The demand for dollars had fallen, and the currency was again appreciating (on Tuesday, the average exchange rate was 26,500 meticais to the dollar).
"We must all understand that the exchange rate is the price that reflects the external position of our country", said Guebuza. "Our currency and its exchange rate are strengthened through increasing production for export and/or for import substitution. Only thus will we have a more stable exchange rate, allowing us to concentrate on the fight against inflation".

Via: "AllÁfrica.com"

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