Six Agreements Signed With World Bank

The Mozambican government and the World Bank signed six agreements in Maputo on Friday, under which the Bank is to provide about 145 million US dollars for development projects.

By far the largest sum is a loan of 93 million dollars from the Bank's soft loans affiliate, the International Development Association (IDA) to finance the Mozambique-Malawi Transmission Interconnection project, linking Malawi to the Southern African Power Pool (SAPP), and allowing trade in energy between the two countries.

45 million dollars of this loan will be spent in Mozambique and 48 million in Malawi. In Mozambique, the work involves building 135 kilometres of 220 kV transmission line, and expanding the existing sub-station at Matambo in Tete province. In Malawi, 75 kilometres of transmission line will be built, plus a new sub- station.

The loan was agreed in July by the World Bank Board of Directors, which stated at the time that the interconnection "will ensure mush-needed diversification of Malawi's electricity supply, and allow the export of any off-peak power surpluses. It will also provide Mozambique's energy sector with a new revenue source".

Also signed was an agreement for an IDA loan of 15 million dollars for a Water Service and Institutional Support project, approved by the Bank's board earlier this month. The project aims to build 370 kilometres of new water pipes in the cities of Beira, Quelimane, Nampula and Pemba, resulting in 10,000 new connections to the piped water supply. Some of the money will also be used to establish an institutional and regulatory framework for water management in smaller cities and towns.

A further 15 million dollars for the water project takes the form of a grant from the Africa Catalytic Growth fund (ACGF), a multi- donor fund set up by the World Bank in 2006, intended to complement IDA loans. This grant agreement was also signed on Friday.

A further loan, also for 15 million dollars, is to provide additional support for Mozambican higher eduation, while a fifth agreement concerns a grant of 6.2 million dollars from the Global Environmental Facility, administered by the World Bank, intended to provide assistance to market-oriented smallholder agriculture in the Zambezi Valley.

The purpose of this project, which also supplements an IDA credit, is to raise the income of farmers in selected districts in the valley.

The final agreement concerns funding of 1.1 million dollars from the Japanese government's Social Development Fund to support preparation of a project on health service provision. Should this project be approved, it will receive a 35 million dollar loan from the IDA to be used in the northern provinces of Nampula, Niassa and Cabo Delgado.

The agreements were signed by Mozambique's Planning and Development Minister Aiuba Cuereneia, and by World Bank Regional Director Michael Baxter.