Mozambique: Political risk could increase cost of energy project financing – HCB
FILE – For illustration purposes only. [File photo: HCB]
The president of Hidroelétrica de Cahora Bassa (HCB) said on Thursday that Mozambique’s political risk could increase the cost of energy project financing and “hinder” the implementation of some projects necessary to meet domestic and regional demand.
In an interview with Lusa in Estoril, where he participated this week in the II Energy Conference of the CPLP, when asked about the impact that the political situation in his country may have on the progress of planned energy projects, some of which are to be carried out with the participation of Cahora Bassa, Tomás Matola stressed that “it has an impact, naturally” on financing and their cost and may hinder the implementation of some.
“We will still feel this impact because we have to go to the markets to raise funds to finance our projects, and the markets are demanding in this regard, in terms of identifying the risks associated with projects, and in this respect, country risk is a determining factor; it is the first risk that investors look at, along with political risk.”
What happens “when the country is in the situation we find ourselves in, with some areas of conflict, is that the price of money goes up, in this case the interest rate, (…), they add the political risk premium. And that makes financing more expensive,” stressed the manager of the company that owns Mozambique’s largest dam and hydroelectric power plant, which this year celebrates its 50th anniversary and is essential for supplying electricity to the region, particularly South Africa.
Asked whether this increase in financing costs could even jeopardise the implementation of some projects, the HCB president said that “it may not stop them, but it may make some projects more expensive and more difficult”.
However, he stressed that he believes in the government, which “is focused and working hard” to ease the political situation.
The crisis resulting from the last general elections in the country in October 2024 is practically resolved, he believes, after two meetings between the country’s president, Daniel Chapo, and the second most voted presidential candidate, Venâncio Mondlane.
“Everything indicates that they have been getting along, because he [Venâncio Mondlane] is also Mozambican and will not be satisfied with contributing to the destruction of his own country,” he said, praising Daniel Chapo as someone “exceptional and open to dialogue.”
The President of Mozambique, Daniel Chapo, and former presidential candidate Venâncio Mondlane met again for the second time on the 21st, as part of the ongoing political dialogue aimed at “pacifying the country.”
“Pacifying the country, peace, reconciliation, forgiveness, harmony and brotherhood among Mozambicans is very important, so it is our goal to engage in dialogue to achieve peace and consolidate peace and reconciliation, because there can only be development when we achieve peace and security, and we can only achieve peace by engaging in dialogue with all social strata,” Daniel Chapo said at the end of his second meeting with Venâncio Mondlane, in a message released to the press.
The Second CPLP Energy Conference took place on Tuesday and Wednesday in Estoril, Portugal, under the theme “Promoting a Resilient, Sustainable and Inclusive Energy Transition for the CPLP,” serving as a meeting point for government officials, financiers, businesspeople and experts from the energy sector.