Rebel acts dash Maputo debt deal

REBEL clashes with government forces in Mozambique have prompted VTB Group, Russia’s second-largest bank, to halt a proposed sovereign debt transaction in the country.

Rebels tied to the opposition Mozambique National Resistance party (Renamo) said they had killed 36 soldiers in a clash earlier this month, a claim refuted by the government, which said only two people had died.

Renamo, which fought a 15-year civil war against the ruling Frelimo party until 1992, this year attacked arms depots and buses, killing several people, and forcing the closure of railway lines used by coal mines owned by Rio Tinto.

“The situation has changed,” Amilcar Barros, a director of VTB’s African unit, said. “In past years there was like a silent agreement” between Renamo and Frelimo. “The political risks have increased significantly. I think there’s a lot of people reconsidering.”

VTB, which is based in Moscow, was considering a transaction with the government tied to infrastructure development in Mozambique, site of the world’s largest discovery of natural gas in the past decade, Mr Barros said.

The bank, which bases its African operation in Angola, is considering oil and gas investment in both nations as well as Uganda. A ports project in Namibia was also assessed.

Mr Barros said a hydroelectric dam project on the Kwanza River in Angola and companies transforming from importers into light industrial producers were being evaluated.