MOZAMBIQUE TRYING TO RENEGOTIATE EMATUM BOND ISSUE

MAPUTO The Mozambican government is attempting to renegotiate the terms of the bond issued in 2013 by the Mozambican Tuna Company (EMATUM) so that payment will only fall due in 2023.

According to a report published in Monday’s issue of the independent newssheet Mediafax, the bond issue was for 850 million US dollars, fully guaranteed by the government. The declared purpose of the money was to pay for 24 tuna fishing boats and six coastal defence vessels built in a shipyard in the French port of Cherbourg.

However, according to the data published in the French media at the time, the cost of the boats was only around 200 million euros, or about 230 million dollars.

Asked what the remaining 620 million dollars were for, the then Fisheries Minister, Victor Borges, said in December 2013 it would cover such items as training, radars, satellite communications and onshore installations, but no itemized breakdown of these costs has ever been provided.

Under the original terms of the EMATUM bond issue, the money must be repaid in seven years with a two year grace period, and at the extremely high interest rate of LIBOR (London Inter-Bank Offered Rate) plus 6.5 per cent.

Last year, Finance Minister Adriano Maleiane announced the government’s intention to try to renegotiate the terms of the bond issue.

Initial optimism that EMATUM would pay for itself has proved wildly misplaced. Last year, according to figures published by the government, the EMATUM fleet only caught 300 tonnes of tuna, although projections for this year are for an improbable leap to more than 4,000 tonnes.

Mediafax quoted a source close to the negotiations between the government and the bondholders as saying that the government’s strategy is to replace the current six monthly repayments with a lump sum, covering both interest and capital, payable in 2023.

Six monthly instalments are a heavy burden for the Mozambican economy in its current state but by 2023, income should be flowing into the State coffers from liquefied natural gas (LNG) projects in the Rovuma Basin in the far north. The predicted gas bonanza is thus expected to allow Mozambique to meet its EMATUM commitments.

Source: AIM