MOZAMBIQUE-SOUTH AFRICA: NEW IMPETUS TO CAHORA BASSA TALKS

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 06862566
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 6
• Document Creation Date: March 9, 2023
• Document Release Date: November 13, 2020
• Case Number: F-2018-01308
• Publication Date: July 22, 1988

Approved for Release: 2020/10/29 C06862566
Directorate of
' Intelligence
CTA A i_A
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Africa Revie
22 July 1988
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ALA AI? 88-017
22 July 1988
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Africa Review
Review
22 July 1988
Page
Articles Mozambique-South Africa: New Impetus to Cahora
Bassa Talks
Improving relations between Maputo and Pretoria have led to a
preliminary agreement to rehabilitate Mozambique's Cahora Bassa
hydroelectric complex, which supplies power to South Africa but has
not operated for five years because of damage caused by
Mozambique's RENAMO insurgents.
Brief
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ALA AR 88-017
22 July 1988
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.mmoninnuipl
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Africa Review
Articles
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Mozambique-South Africa:
New Impetus to Cahora Bassa
(b)(3) Talks
Mozambique's Cahora Bassa hydroelectric complex,
built by the Portuguese in the 1970s to supply power
largely to South Africa, has become a key bellwether of
relations between Maputo and Pretoria. The complex
has not been generaung electricity since 1983 because
of damage to powerlines by Mozambican National
Resistance (RENAMO) insurgents. Portugal�which
still owns the facility�Mozambique and South Africa
have been discussing rehabilitation schemes since 1984,
but an agreement has been thwarted by deep-seated
mistrust between Maputo and Pretori
complex security and financial issuesrs-w-di
Generally improving relations between Mozambique
and South Africa in recent months have given new
impetus to the negotiations. A preliminary agreement
reached dunng trilateral talks last month in Lisbon has
been forwarded to each government for formal
approval, and the negotiators have expressed optimism
that rehabilitation of Cahora Bassa will begin within a
year. In our judgment, the preliminary agreement
represents a substantial step in establishing closer
cooperation between Maputo and Pretoria.
Nevertheless, we believe unresolved security issues and
Maputo's continued suspicions of So th African
intentions will slow further progress.
The Preliminary Agreement
The pact encompasses financing for the project, a new
rate structure, and security. Italy�the largest Western
aid donor to Mozambique--and South Africa reportedly
will split the estimated S30 million cost required for the
rehabilitation effort, which is to be conducted by a
consortium made up of an Italian firm and its South
African subsidiary, as well as Hydroelectrica Cahora
Bassa (HCB), the company that actually operates the
1
dam. Work is expected to begin later tons ;,ear,
ith an
csum ttextc_om flier on date 18 months later�in early
1990.
The second part ol the agreement entails a new rate
structure for the electricity that South Africa would
purchase from the Portuguese owners of Cahora Bassa.
the negotiators agreed on a
new rate of approximately 8.8 cents per kilowatt hour,
10 percent of which would be paid to Mozambique.
The fixed rate established in 1984 of about 5 cents per
kilowatt hour was recognized by the South Africans as
insufficient to produce the revenue necessary for Lisbon
to alleviate the debt burden it incurred by financing an
essentially inoperable hydroelectric facility for five
years Inflation atso had to
be figured into the rate structure, as well as the amount
of revenue the Mozambicans would earn.
For the South Africans, the proposed rate structure
ultimately would make Cahora Bassa a relatively cheap
energy source. A study commissioned by Pretoria in
1984 estimated that a $600 million capital investment in
coal-fired plants would be necessary to replace the
projected 8 percent of the country's electricity demand
that could be supplied by Cahora Bassa. Over the life of
the project, the renewable energy source of the Zambezi
River--which feeds the Cahora Bassa hydroelectric
station--would complete South Africa's energy grid at a
lower average cost than if the electricity was purchased
from South Africa's existing energy grid, which at
present is able to produce surplus electricity for about 5
cents per kilowatt hour
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MAPUTO
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Security--the Security--the Key to Cahora Bassa's Future
To make the project work, the security of rehabilitation
crews, the power station, and the power lines
themselves must be ensured. The agreement calls on
the Mozambican military to take full responsibility for
the protection of work crews during the rehabilitation
hase of the roject.
he Mozambicans envision an initial
soldiers, to be expanded to more than
s as the work beco
Maputo has reserved the right to request
foreign assistance in this task, possibly referring to
British ex-military trainers currently training
Mozambicans for security details along the Nacala rail
line. the South Africans
agreed to supply the Mozambican security contingent
with over $S million-worth of nonlethal equipment. In
our judgment, Mozambiques African allies, particularly
Zimbabwe, which maintains several thousand troops
primarily along the Beira corridor, are not likely to
assist Maputo in this task because of the direct benefits
Cahora Bassa would provide South Africa.
During the operational stage of the project, the
agreement specifies that an undetermined "distributing
body" be appointed to guarantee the efficient transport
of electricity and the security of the power lines--which
stretch nearly 870 miles to a distribution station near
Pretoria. Discussion thus far appears to have focused on
the concept of a private company "third entity"--
possibly Lonrho, a British-owned multinational with
major interests in Africa--to serve in this capacity
the third entity concept was shelved just
prior to the Lisbon talks because the renegotiated tariff
rate--which at the time stood at about 8 cents per
kilowatt hour--did not cover the cost of the protection
force envisioned. Negotiations with the prospective
ort,;,,tp,mity" may be renewed now that a higher rate has
(b)(1 ) tablished,
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rehabilitation has been completed
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Security arrangements for the rehabilitation effort, as
well as for the power lines and pylons over the longer
term, are at the root of the military and political
considerations surrounding the trilateral agreement. The
fundamental issue of how to control the RENAMO
insurgents, who in all likelihood would attack the highly
vulnerable power lines, is only partly addressed in the
agreement--and in our judgment probably will be the
main factor thwarting further progress toward a deal.
Just two days after the agreement was announced in
Lisbon, RENAMO claimed to have destroyed two more
power pylons linked to the Cahora Bassa facility,
orobably to emrliasize the vulnerability of the line.
Maputo would view the successful reopening of the
Cahora Bassa complex as a key indicator of South
African good faith in restraining RENAMO, in our
view, but may overestimate Pretoria's ability to control
the insurgents. The South Africans reportedly have
explored a number of ways to coopt the insurgents into
steering clear of the power lines, thus far with little
apparent success. Tiny Rowland, Lonrho's chief
executive, claims that a South African Government
representative--with Maputo's approval--asked him to
contact RENAMO in order to discuss the security of the
Cahora Bassa transmission lines
1Rowland says he turned down the
offer, stating that vandals outside of RENAMO control
would pose a threat even if RENAMO pledged not to
interfere with the project. For the South Africans, if
RENAMO agrees to refrain from attacking the
transmission lines, the involvement of a third party
would allow Pretoria to deny the charge that it had been
controlling the insurgents all along.
Outlook
As the agreement now stands--with the Mozambicans
providing security during the rehabilitation phase, and
the distributing entity to be determined once power is
again available--we believe there is little guarantee that
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the project will survive past its initial stages, assuming
that RENAMO has not already been co-opted.
Mozambique almost certainly could not by itself muster
an amply equipped armed force of sufficient size and
skill to protect work crews, even with British ex-
military trainers and South African nonlethal supplies at
its disposal. In similar protective roles--along portions
of the Nacala rail line, for instance--the Mozambican
Army has been largely ineffective
The Cahora Bassa talks have been one of the key factors
driving the generally improving relations between
Maputo and Pretoria in recent months, with the Lisbon
agreement representing a potentially significant
milestone. Although most of the major economic issues
appear to have been resolved, there is no information
indicating that the key concern--RENAMO attacks--has
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been adequately addressed. Maputo probably remains
wary of Pretoria's intentions, and may view further
RENAMO attacks on power pylons as an indication of
South African insincerity. Because Pretoria's relations
with Maputo depend ill part Oil the suecebsiul
completion of the project, we believe South Africa will
be reticent to enter the rehabilitation project without
some assurancc.bs that RENAMO would not attack the
highly vulnerable work crews and powerlines. In our
judgment, the thorny security issues will slow further
progress, leaving the fate of the Lisbon agreement
uncertain
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