Elias Paulo, the director of the Moamba Major dam, which is being built on the Incomati river in Maputo Province, says he is unaware that the Brazilian National Economic and Social Development Bank (BNDES) has cut off funding for the project.

The Moamba Major is one of 25 construction projects, mostly in Latin America, where BNDES has suspended funding, because the Brazilian contractors involved are being investigated by the Brazilian federal police for corrupt practices under “Operacao Lavo Jato” (“Operation Car Wash”).

BNDES only announced the suspension on Tuesday, but said it had taken effect as from May. The Moamba Major dam is budgeted at 466 million US dollars, of which 230 million USD are covered by a loan from BNDES, while the rest comes from Mozambique’s own resources.

Interviewed by the independent television station STV Thursday, Paulo said the news took him by surprise. “We have no knowledge of this. The (Mozambican) government has not been notified. A few days ago, an audit mission from BNDES was here and we didn’t talk about this. I’m hearing it for the first time from you,” he told STV.

“Through the official channels we have no information from BNDES. There’s no reason for this. The Mozambican government is complying with its obligations. We are working and about 7.5 per cent of the job has now been done.”

Paulo could see no reason for Operacao Lavo Jato to interfere in the Moamba Major project. The body under investigation is the Brazilian building company, Andrade Gutierrez, but the line of credit was not signed with Andrade Guitierrez.

“The Mozambican government contracted a line of credit from the Brazilian government via BNDES. Afterwards came the commercial contract with the contractor, which is Andrade Gutierrez, the company that will build the dam”.

Paulo said he could not see how a line of credit agreed between the two governments could have anything to do with Operacao Lavo Jato.

The Moamba Major dam is intended to control the waters of the Incomati, thus preventing any repetition of the catastrophic flooding which has occasionally occurred on the lower reaches of the Incomati. The reservoir behind the dam will store up to 760 million cubic metres of water, which will be used for irrigation and electricity generation. The plans include installing a 15 megawatt power station at the dam.