Portuguese finally relinquish Cahora-Bassa: the handover of Africa's massive dam sweeps away the last vestiges of Portuguese colonialism and provides Mozambique with its 'second independence'. Report by Tom Nevin.

For a consideration of $950m and a wait of more than 30 years, Mozambique is finally the owner of Cahora-Bassa, the biggest dam in sub-Saharan Africa. The handover effectively ends Portugal's ownership of the project more than three decades after the former colonial power's departure from Mozambique.

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The historic transfer at the village of Songo on the Zambezi River dam site in Tete province was made in November 2007 by Portuguese Finance Minister Teixeira dos Santos to Mozambican President Armando Guebuza, witnessed by four African heads of state.

For Mozambican and Portuguese alike, the ceremony was the final break with the colonial era.

The scheme, completed in 1975, is 125km northwest of Tete on the Zambezi River and has been under the majority shareholder ownership of Portugal since 1975 when Mozambique gained independence. Negotiations over the ownership of the dam have been ongoing between the two countries for several decades and under the terms of the deal agreed between them, Mozambique had to confirm its ability to conclude the deal by 31 October. On the day before the deadline Mozambique notified the Portuguese government that the conditions, including the financial ones, were in place to complete the change of the shareholder structure of the dam.

Independence complete

"This is our second independence," Guebuza told thousands of people at a rally marking the dam's handover, saying Mozambique had to proclaim its independence in 1975 without control of its strategic infrastructure. "However, like the struggle for our national liberation that took 12 years, we remained convinced that one day we would win because we knew we were right in our demands. With the conclusion of the technical agreements pertaining to the process of transfer, we want to announce today, 27 November, to the people of Mozambique and to the whole world, from this green and beautiful village of Songo, that Cahora Bassa is ours!

"We are finally able to use the dam to satisfy the energy needs of our country," said Guebuza.

The transfer followed the 30 October 2006 signing of a purchase agreement between the two countries which Guebuza described at the time as marking "the final chapter of the history of foreign domination" in Mozambique.

Under the terms of the agreement, the Mozambican government paid Portugal a total of $950m to buy the 82% controlling stake still held by Lisbon. Maputo paid a 'deposit' of $250m and was granted 14 months to pay the balance. The outstanding funds, raised mainly through offshore borrowings led by the World Bank, were paid two months ahead of deadline.

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It wasn't all plain sailing, however, and a major hurdle appeared in September last year when the European Union's statistics body, Eurostat, stirred up the waters by requesting more information from the Portuguese government on the changes to Cahora Bassa's shareholder structure.

Eurostat wanted more detailed information about the operation, particularly the transfer of a majority stake owned by the Portuguese state in Cahora Bassa to the Mozambican state. The issue, reported Portuguese daily Diario de Noticias, was how to account for the operation as well as how to assess the impact it will have on Portuguese public accounts. It would then decide whether or not it was compatible with Portugal's commitments to cleaning up its finances.

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On the face of it the $950m deal seemed good for Portugal although the Lisbon government had demanded $2.5bn for the dam, and the lesser sum would amount to a 62% pardon of the debt, accounted as a capital transfer. In theory, this would increase Portugal's budget deficit.

After a few anxious months, the deal was confirmed at the original price and from there onwards final negotiations proceeded smoothly.

The lake created by Cahora Bassa covers an area of 2,000[km.sup.2] and provides water and livelihood to Mozambican, Zambian and Zimbabwean peoples in the Zambezi River valley. Now it will also be seen as critical to providing clean energy not only for Mozambique but for several others in the region. Only Egypt's Aswan dam, which has created a lake covering some 2,700[km.sup.2], has a bigger area of surface water.

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Cahora Bassa's rebirth comes at a critical time for the economic fortunes of energy-deficient countries in the region, notably Mozambique itself, Botswana, Zimbabwe and soon too, Malawi. There are also plans to increase power production by a further 1,200MW once investors are found to develop the southern side of the project. "Given its production capacity of more than 2,000 megawatts of clean and ecologically-sound energy, Cahora Bassa is important for the economic development of not only in Mozambique but for a big part of southern Africa as well," observed Mozambique government spokesman.

RELATED ARTICLE: Cahora Bassa

A turbulent history

The war and weather-torn Cahora Bassa hydroelectric project in Mozambique's Tete province is Africa's second-largest artificial lake. Only Egypt's Aswan dam is bigger in terms of surface water.

Cahora Bassa is one of the three major dams on the Zambezi river system, the others being Kariba and Itezhi-Tezhi. However, Itezhi-Tezhi is not on the main stream of the Zambezi, but on its tributary the Kafue River.

The dam began to fill in December 1974 after construction commenced in 1969 by the Portuguese colonial government. It is 171m high by 303m wide at the crest. The lake has reached a maximum length and width of approximately 250km and 38km respectively, flooding an area of 2,700[km.sup.2] with an average depth of 20.9m.

Situated on the Zambezi river, the dam took six years to build and was only completed in 1975 as Portuguese rule drew to a close.

During its construction, the dam site was repeatedly attacked by Frelimo insurgents in an attempt to block what was at the time partially an attempt by Portugal to increase popular support for her colonial government in Mozambique.

After Mozambique's independence, Cahora Bassa was paralysed during the 1976-92 civil war as a result of sabotage attacks by Renamo rebels before being extensively repaired. It is the biggest hydroelectric dam in terms of concrete volume in Africa.

Until its handover to Mozambique 2007 the dam was operated by Hidroelectrica de Cahora Bassa.

Since closure, the Zambezi, which is the fourth largest floodplain river in Africa, has received a far more regulated flow rate, but disastrous floods still occur. A considerable kapenta (river sardine) fishery has developed at Cahora Bassa with annual catches exceeding 10,000 tons.