Maputo Port Development Company S.A.R.L.

MIGA has provided guarantees to Portus Indico-Sociedade de Servicos Portuarios S.A. (formerly DEAIR Comercio Internacional, Consultoria e Servigos, S.A.) of Portugal, of $459,000 to cover its $510,000 equity investment in, and $6.14 million to cover $6.8 million of shareholder loans, plus interest, to the Maputo Port Development Company S.A.R.L. The guarantees are for fifteen years, and are against the risks of transfer restriction, expropriation, and war and civil disturbance.

The project involves the rehabilitation, development, financing and operation of the Maputo Port under a Build Operate and Transfer scheme. At its peak, the ports revenues represented 80 percent of Mozambique's balance of trade. Civil war and a general economic decline have left the port handling only 2.5 to 3 million tons per annum (tpa), compared to the 12.5 million tpa handled in the late 1960s. By awarding the concession to the private sector in 1997, the government sought to restore port operations to full capacity, lower the cost of port tariffs through improved operating efficiencies, and boost the economy through improved export outlets for the countrys traditional products. Given its location, in proximity to three main railway connections, the port provides a very efficient and low-cost outlet for trade not only for Mozambique, but also Zimbabwe, Malawi, Botswana, Swaziland, Zambia, and northern South Africa. These areas are either currently not served, or served through higher cost alternatives in South Africa, which are already operating at capacity.

The port and connecting railway upgrades are expected to raise gross revenues from the current $80 million to $150 million in the short term, indicating a significant increase in traffic volumes. At the same time, direct operating cost will be reduced substantially and translated into lower tariffs for exporters, including operators in neighboring countries. During the three-year construction period, the port will create about 800 additional jobs, all with local contractors. The project will provide its workers with training on new equipment and procedures. The project owners have also pledged to invest $250,000 annually in local community projects during the construction period, and $1 million, cumulatively, thereafter. Targeted projects include the creation of new schools in the area, donations to local clinics, and upkeep of local road infrastructure. The project is also expected to contribute $8.8 million in taxes per year to Mozambique, an IDA-eligible country still recovering from the long civil war and recent devastating floods.