/ 12 March 2007

Bob’s $40m bail-out

Zimbabwean President Robert Mugabe has bought himself a few more months’ financial wiggle room after Namibia granted him soft loans worth US$40-million last week.

During Mugabe’s four-day state visit to Namibia, the Namibian government announced that its power utility, Nampower, was to loan between $30- and $40-million to the Zimbabwe Electricity Supply Authority (Zesa) to rehabilitate its Hwange thermal power station and national power grid.

In return for the loan, Namibia is to receive between 40MW and 150MW of electricity from Zimbabwe per month from January next year. This would act as a possible substitute for the estimated 40% of its electricity supplies currently imported from South Africa’s Eskom, officials said at the signing of the electricity agreement.

But critics questioned Zimbabwe’s costing of the rehabilitation project and how the cash-strapped Harare regime would use the money, pointing out that Zimbabwe has been defaulting on similar loans for years.

Zesa, which also imports about 40% of its requirements from Eskom, owes the South African power utility an estimated R2,4-billion in unpaid electricity imports.

Last year, Zimbabwe borrowed $6-million from China for a similar Hwange upgrade and still owes the European Investment Bank for a â,¬12-million loan issued in 1999 for rehabilitating parts of its electricity grid.

Prior to Mugabe’s visit, Mines and Energy Minister Errki Nghimtina, a key ally of former Namibian president Sam Nujoma, had warned in Parliament that ”South Africa could cut us off anytime”, seemingly laying the political groundwork for the loan.

The visit, Mugabe’s third since President Hifikepunye Pohamba took over from Nujoma in 2005, also saw Namibia and Zimbabwe conclude a double-taxation agreement that was apparently aimed at the growing number of Zimbabwean economic immigrants employed in Namibia.

Mugabe also announced during the visit that oil deliveries ”on very favourable terms” from Equatorial Guinea had commenced recently, adding that Zimbabwe would only have to pay for the oil every three months.

In 2004, the Mugabe government arrested a multinational group of coup plotters heading to Equatorial Guinea to overthrow the regime of Teodoro Obiang Nguema. The group, headed by Simon Mann, had stopped in Zimbabwe to purchase weapons. Mann still remains in prison in Zimbabwe and is currently fighting the Equatorial Guinean government’s attempts to have him extradited.

Namibia’s nascent diamond cutting industry also appeared to have offered some financial hope to the Zimbabwean strongman. Last month, Mugabe nationalised the Marange diamond mines after concerns over illegally mined diamonds entering the legal market were raised by international watchdog bodies.

In an apparent response, officials from Lev Leviev Diamond (LLD) travelled to Harare for a high-level meeting the weekend before Mugabe’s Namibian visit, during which he also visited LLD’s plant in Windhoek.

Addressing the local business chamber — where the private sector was noticeably absent — Mugabe suggested that the regional diamond producers club together to form their own diamond marketing monopoly.

”What will the world do? They will have to get married without earrings,” a laughing Mugabe said as his audience nervously sniggered.