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Mozambique president dismisses finance minister

10 June 2016 Comments (0) Africa, Latest Updates from Reuters, Politics

MAPUTO (Reuters) – Mozambique President Filipe Nyusi on Thursday fired Finance Minister Adriano Maleiane, who has been embroiled in more than two weeks of negotiations with Russia’s VTB Bank over a late $178 million loan repayment.

A statement from Nyusi’s office gave no reason for the dismissal and did not say who would be replacing Maleiane.

Mozambique Asset Management (MAM) borrowed $535 million from VTB to build shipyards in the capital Maputo and the northern town of Pemba in expectation of a rapid takeoff in the offshore gas sector but missed a May 23 deadline for its first loan repayment.

Restructuring the loan, updating business plans and bringing strategic partners on board were all possible ways to avoid a default on the debt, Maleiane said on Wednesday.

Delays to gas projects and at least $1.35 billion of secret government borrowing have created a foreign debt burden that threatens to plunge one of the world’s poorest countries into economic crisis.

Financial watchdogs from Switzerland and Britain are investigating Credit Suisse and VTB Bank for arranging the heavy undisclosed sovereign borrowing.

 

(Reporting by Manuel Mucari; Writing by Ed Cropley and Ed Stoddard; Editing by Andrew Roche)

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Swiss and UK watchdogs quiz Credit Suisse over Mozambique loans

7 June 2016 Comments (0) Africa, Business

ZURICH (Reuters) – Switzerland’s financial watchdog said it is in touch with Credit Suisse over Mozambique’s undeclared loans, while Britain’s regulator is also making inquiries, according to a source familiar with the situation.

In April, Mozambique, one of the world’s poorest countries, disclosed as much as $1.35 billion of sovereign borrowing that may have made its debt unsustainable.

Swiss bank Credit Suisse and Russia’s VTB have been active in Mozambique, arranging loans for state-owned firms as well as helping with a eurobond issue.

A spokesman for Swiss financial watchdog FINMA told Reuters on Tuesday it was in contact with Credit Suisse over its engagement with the sub-Saharan African nation.

“We are aware of the issue and are in contact with the bank over this matter,” he said on Tuesday, declining to give any further details.

Separately, a source told Reuters on Monday that the UK’s Financial Conduct Authority (FCA), was looking into the role both Credit Suisse and VTB played.

Credit Suisse declined comment.

VTB said it had been open and transparent with the regulator on the Mozambique transaction and was not aware of any investigations.

“As we previously said, the total public debt number disclosed in the prospectus of the issued sovereign eurobond was inclusive of all outstanding direct and publicly guaranteed government debt, as confirmed to us by Ministry of Finance of Mozambique,” the Russian bank said.

Mozambique’s foreign debt – including $2 billion of commercial borrowing arranged without consulting parliament as required – has ballooned in the last four years, largely due to expectations it was set to become a major natural gas producer.

However, those expectations are now being shown to be wildly premature, leaving the country with a foreign debt burden equal to $400 per head – only a fraction below the International Monetary Fund’s $435 annual per capita GDP estimate.

 

(Reporting by Joshua Franklin and Oliver Hirt in Zurich, Alexander Winning in Moscow and Ed Cropley in Luanda; Editing by Michael Shields and Alexander Smith)

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Mozambique says loans to state firms necessary for security

27 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

MAPUTO (Reuters) – Mozambique provided guarantees on loans to state firms Proindicus and Mozambique Asset Management to protect strategic national infrastructure and help maintain naval equipment, a government spokesman said.

The spokesman’s comment, in a statement, followed disclosure by the International Monetary Fund last week that Mozambique had admitted to having more than $1 billion of undisclosed debt and that the two parties were evaluating the implications of the disclosure.

Earlier, a source at the Fund had told Reuters that Proindicus, owned by the interior and defence ministries and the state security services, had been lent $504 million by Credit Suisse and $118 million by Russia’s VTB.

Another loan of $535 million had gone to Mozambique Asset Management, another state company set up to build a shipyard in the northern city of Pemba, that source said.

In his statement dated Tuesday but acquired by Reuters on Wednesday, spokesman Mouzinho Saide said the government had granted a $622 million loan guarantee to Proindicus in 2013, and $535 million to Mozambique Asset Management the following year.

“We faced security threats, such as piracy … illegal immigration, drug trafficking … and illegal fishing,” Saide said after a meeting of Mozambique’s cabinet.

He said the government had also been keen to ensure protection of the assets of oil and gas companies operating in Mozambique’s exclusive economic zone.

The loans are in addition to an $850 million ‘tuna bond’ issued in 2013 and restructured last month because the southeast African nation was struggling to meet repayments.

The IMF source said the extra borrowing had pushed Mozambique’s foreign debt to $9.64 billion, a level “very close to unsustainability”.

 

(Reporting by Manuel Mucari; Writing by Stella Mapenzauswa; Editing by Richard Balmforth)

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Investors want answers from Mozambique, banks over loan mystery

21 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

LONDON (Reuters) – Investors holding Mozambique’s recently restructured ‘tuna bond’ are demanding answers from the government and its bankers over what the International Monetary Fund says are previously undisclosed loans that could exceed $1 billion.

The revelations have rocked the relationship between one of the world’s poorest countries and the International Monetary Fund (IMF), which last year agreed to lend Mozambique $286 million to cushion its economy following deep declines in commodity prices and the value of the metical currency.

Only last month investors met Mozambican officials and agreed to swap an outstanding $697 million of the dollar-denominated tuna bond, issued in 2013 by state-owned fishing-company Ematum, for a sovereign issue.

The deal was seen widely as investor friendly and accepted by holders representing more than 80 percent of the issue. Ratings agency Standard and Poor’s defined the restructuring as “tantamount to a default”.

The original $850 million bond has been controversial from the start: when it was launched, it was presented to investors as funding for “fishing infrastructure” but it quickly became apparent most of the cash was for defence.

Under IMF pressure, the government re-allocated $500 million of the debt to its defence budget. The subsequent bond rescheduling was part of efforts to clean up and rebuild trust for the southern African nation, under pressure from donors to improve the transparency of its finances.

However, last Friday the IMF said it believed Maputo borrowed $1 billion more than previously disclosed.

The Fund’s Africa Director, Antoinette Sayeh, said the additional loans appeared to have been borrowed from Credit Suisse and Russia’s VTB Bank and allocated to Mozambique’s defense and security sector.

Credit Suisse and VTB Bank were also joint dealer managers on the exchange offer launched in March. Mozambique’s Finance Minister Adriano Maleiane was quoted on Sunday saying the country had no hidden loans and that this was down to “some confusion”.

Investors say if found to be true, the IMF allegations could greatly damage the country’s reputation and ability to raise funds.

“At this stage, things are really up in the air until we hear from the various parties of what is really going on,” said one fund manager, who holds the bond but declined to be named. “If this is additional debt which was not included in the overall debt stock it completely changes the overall relationship with the international financial institutions’ community, the IMF, the donor community and it changes the market relationship. There is a lot of harm created in the short term.”

Details of the alleged new loans are sketchy and have not been disclosed in the prospectus to holders of the new bond issue.

However, a February 2013 Credit Suisse document obtained by Reuters outlines a $372 million loan to Proindicus, a company owned by the Ministries of Interior and Defence and the State Security and Intelligence Service. According to the document, the funds are to be spent on high-speed naval interceptors, radar stations, off-shore patrol vessels and aircraft. Credit Suisse declined to comment on the document.

The Ematum bond swap prospectus seen by Reuters also notes under “conflicts of interest” that the dealer managers may make loans or be involved in other transactions to Mozambique.

Marco Ruijer, portfolio manager at NN Investment Partners, who also holds the bond said he had addressed questions to Credit Suisse.

“It was perhaps not prudent of Credit Suisse to say we are doing restructuring to extend maturity from 2020 to 2023 when they themselves have a loan on the books which is maturing before 2023,” said Ruijer. “Now they get money back earlier than the bondholders.”

A Credit Suisse spokesman declined to comment on whether the bank had arranged loans for Mozambique in addition to the Ematum bond.

A source closed to VTB said the bank was assured by Mozambique’s finance ministry that all its financing had been disclosed to the IMF, and that the total debt spelled out in the prospectus included all outstanding direct and publicly guaranteed debt.

Mozambique has seen its foreign debt spiral in recent years. According to the restructuring prospectus, total foreign direct and government-guaranteed debt ballooned from $5.244 billion in 2012 – before the Ematum bond issue – to $9.637 billion in 2015. Combined with domestic debt of $1.5 billion, the government had obligations last year equivalent to 102 percent of GDP, the document said.

 

(By Karin Strohecker. Additional reporting by Sujata Rao in London, Ed Cropley in Johannesburg and Lidia Kelly in Moscow; Editing by Dominic Evans)

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Exxon Mobil in talks to buy into Eni’s giant Mozambique gas field

25 March 2016 Comments (0) Africa, Business, Latest Updates from Reuters

MILAN/LONDON (Reuters) – Exxon Mobil is in talks to buy a stake of around 15 percent in Italian oil major Eni’s giant Area 4 gas field in Mozambique, two sources familiar with the matter said. Exxon is seen as a front-runner to buy into Eni’s gas development and this would be the U.S. firm’s first big acquisition since the oil price collapse. Area 4, in which Eni holds a 50 percent operating stake, is located in Mozambique’s Rovuma Basin, where gas in place amounts to some 85 trillion cubic feet — one of the richest gas discoveries of recent times.It will feed a series of onshore LNG export plants, mainly supplying Asian markets. ENI said previously it aimed to sell around 15 percent of the field.

Two sources said Exxon was in talks to buy a stake of that size, one of whom said Eni was also negotiating with other firms. “I am upbeat a deal will be reached fairly soon,” the second source said. A banking source familiar with the matter said Exxon was interested in buying Eni’s whole 50 percent stake, while a fourth source said Exxon was looking at unspecified stakes in all Eni holdings up for sale, also including assets in Egypt and elsewhere in Africa. Exxon and Eni declined to comment. Eni, a front-runner among the majors in finding reserves, said earlier this month it would sell 7 billion euros of assets to 2019, most from farming down prize acreage. But it aims to hang on to operatorship of the fields. “The disposals will be mainly through the dilution of our stakes in recent and material discoveries,” CEO Claudio Descalzi said earlier this month, picking out Mozambique and Egypt as prime candidates. Descalzi said the group was not far from disposal in Mozambique, where it was holding talks with “a lot of interested parties”. Sales talks have got bogged down in recent years after crashing oil and gas prices drove a wedge between buyers’ and sellers’ price expectations, industry sources have said. Eni has been in talks with several buyers including China’s Huadian Corp, sources have said. The huge productive capacity of Eni’s Mozambique acreage attracted peak valuations two years ago, when Eni sold 20 percent to China’s CNPC for $4.2 billion, amid strong competition for reserves.

 

(Reporting by Oleg Vukmanovic and Stephen Jewkes in Milan, Ron Bousso and Freya Berry in London, Terry Wade in Houston; editing by John Stonestreet)

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Eni steals march on East African LNG rivals with Mozambique plant approval

25 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

MILAN (Reuters) – Italy’s Eni said on Wednesday it has won approval from the Mozambique government to build its planned Coral floating liquefied natural gas plant.

The company, which aims to sell all the LNG from the plant to British oil company BP, is expected to make a final investment decision this year but has now overcome one of the biggest hurdles.

The pace of development of giant gas export schemes has slowed globally as liquefied natural gas prices have plummeted with oil prices, prompting many companies to delay funding decisions until business conditions brighten.

Eni is moving ahead in Mozambique despite the added challenge of using a relatively untested technology to ship the gas.

Its floating LNG (FLNG) export plant will be moored above the Coral gas field, containing 5 trillion cubic feet of gas, in resource-rich waters off Mozambique.

One of the world’s poorest countries, Mozambique is hoping to fuel future prosperity with revenue from an estimated 180 trillion cubic feet of offshore gas.

Eni’s plans include drilling six subsea wells and installing a floating LNG facility with a capacity of around 3.4 million tonnes per year.

Regional LNG rival Tanzania has struggled to match Mozambique’s pace of progress in getting its own fledgling industry off the ground, hamstrung by regulatory uncertainty and other factors.

Large latent capacity in the United States to export LNG at relatively low cost has also raised the competitive bar for what rival projects elsewhere in the world must do to attract customers, industry sources say.

LNG prices are around a quarter of what they were two years ago as a wave of new supply has overcome demand growth, depressing the market, with yet more supply on the horizon as the United States starts exporting.

Eni CEO Claudio Descalzi said approval of the Coral POD was a historical milestone for the development of the group’s discovery of 85 trillion cubic feet of gas in the Rovuma Basin.

“It is a fundamental step to progress toward the final investment decision of our project which envisages the installation of the first newly built FLNG facility in Africa and one of the first in the world,” Descalzi said.

Eni is the operator of Area 4 with a 50 percent indirect stake owned through Eni East Africa which in turn holds 70 percent of the Area.

U.S. energy company Anadarko Petroleum plans to build an onshore LNG export scheme in Mozambique, but is expected to lag Eni’s project.

 

(By Oleg Vukmanovic and Stephen Jewkes. Editing by Francesca Landini and Susan Fenton)

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Sasol to start drilling in new Mozambique oil and gas fields

1 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s Sasol has received the green light from Mozambique to develop more oil and gas fields in the southern African state, the company said on Monday, without disclosing how much the project will cost.

Mozambique is sitting on huge gas reserves and developing liquefied natural gas export projects is expected to bring tens of billions of dollars to the impoverished state.

The petrochemicals giant, which makes 40 percent of its revenue from oil, said the project, about 600 km (372 miles) north of the capital Maputo, will be rolled out in stages. The first phase will include an oil, liquefied petroleum gas and gas project adjacent to its Pande and Temane fields.

Natural gas from Pande and Temane fields, in which Sasol holds a majority stake, is currently produced and processed at a central facility before being transported on an 865 km pipeline to gas markets in Mozambique and South Africa.

Sasol President and Chief Executive David Constable said the project was a “major milestone in further developing natural resources, which will significantly benefit Southern Africa.”

Gas projects being developed by Italy’s Eni and U.S. energy firm Anadarko will be given the final go-ahead by the end of this year, the state-run National Hydrocarbon Company (ENH) said on Sunday.

 

(Reporting by Peroshni Govender; Editing by James Macharia)

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Mozambique’s Nyusi fires deputy central bank governor

26 January 2016 Comments (0) Africa, Latest Updates from Reuters, Politics

MAPUTO (Reuters) – Mozambican President Filipe Nyusi has fired the central bank’s deputy governor António Pinto de Abreu, the president’s office said on Tuesday, without giving a reason.

The sacking of de Abreu, who has been deputy governor of the Bank of Mozambique since Dec. 2010, comes ahead of its annual meeting later this week.

 

(Reporting by Manuel Mucari; Writing by Stella Mapenzauswa; Editing by James Macharia)

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