Chapter 6 - Mphanda Nkuwa Dam - How Mozambique can tap into changes in China’s engagement

Chapter 6 - Mphanda Nkuwa Dam - How Mozambique can tap into changes in China’s engagement

6.1. Introduction

This chapter looks at a particular instance of an important dimension of China’s engagement of Mozambique – that important dimension is the infrastructure sector and the particular instance is the Mphanda Nkuwa dam to be built in the Zambezi river.
The dam is a telling window into the intricacies of China’s engagement of the country. Besides government documents, there has been little academic literature exclusively analyzing the political and environmental setting of the dam. This study will look at the former and not extensively on the latter. James Morrisey (2006) on behalf of Justiça Ambiental (in a partnership with IRN) has been one of the few who dedicated a whole report to the dam project. This lack of attention to the impact of the dam is particularly serious since the dam can potentially dislodge around 1400 farmers. Information has been lacking regarding how the changes in river fluctuations will affect river fisherman and others who depend on the river flow (IRN, 2006). By looking more closely at the political nuances of the negotiation process of the dam however hopefully some light will be shed on the dynamics behind the project as well as paving the way for more informed discussion and work regarding the environmental impact of the infrastructure project. Literature on local micro-political economy will be relevant to assess the prospected impact of the dam and contextualize what is also at stake when the exchanges of high level diplomacy concerning the building of the dam unfold. Literature concerning the impacts of mega-projects, economic development and the implications of the strategic options of the Mozambican government will be taken into account in the discussion. After providing a brief profile of the story of the dam, evidence from the dam will be analyzed when it comes to the signs the negotiation process sends that can be important in crafting Mozambique’s economic policy-making as well as that of the Southern African region. The chapter concludes with a final extensive debate on how the dam can affect negatively and positively Mozambique’s development.
6.2. The story of the dam – Geneology of Mphanda Nkuwa

Mphanda Nkuwa is on the verge of becoming the largest infrastructure scheme in Mozambique involving Chinese investment. The construction of the 1,500 MW capacity dam in the Zambeze river is expected to start in 2009 and to be completed in 2014. Its site will be in the lower Zambezi Area, 70 km south of the famous Cahora Bassa dam. A small profile of the Zambezi River is also relevant. It is one of the longest rivers in Africa and is already considerably damned with up to 30 dams in its basin that goes all the way from Angola to Mozambique. Two of the dams with biggest dimensions are that of Cahora Bassa, already in Mozambique and the Kariba dam in Zimbabwe. The valley of the river is estimated to hold about 72 million people, from which about 80% are dependant on the river for agriculture and fishing. The total cost for the dam was initially estimated to be US$2.3 billion, of which US$1.1 billion are for the dam itself and US$1.2 billion for the transmission lines. The initial promoters were the Ministry for Mineral Resources and Energy of Mozambique and NEPAD. Also at an early stage of the negotiation process, the European Investment Bank and the World Bank had expressed interest in the financing of the project but were let unsatisfied with risk-analysis of the 2001 feasibility study carried out by UTIP “Unidade Técnica de Implementação dos Projectos Hidroeléctricos” (Technical Unit of the Implementation of Hydroelectric Projects) (Meguigy 2002).
China is involved through the activities of China Exim-Bank that pushed for the building of the dam from the start and is set to become one of its major financiers in 2008. An MOU was even signed between the Mozambican government and Exim Bank in April 2007. The deal however has now been approved in parliament and the construction contract has been given to Brazil’s Camargo Corrêa with Electricidade de Moçambique and Energia Capital as partners. The first agreement between Mozambique’s government and Camargo Correa was signed in September 2007, after the MoU between the Mozambican government and China Exim Bank, while the composition of the consortium that will finance the project had not yet been finalised by mid-2008. The most interesting facet of the investment model however is that there will be no Mozambican public monies involved in financing the dam. It is up to Camargo Correa and its partners to organize for investors, so the responsibility for finalizing the story of the dam is now on the side of the Brazilian company. Camargo Correa is taking the project very seriously but, as an organization, is worried and nervous about managing an investment of such dimension, it is its first endeavour of such nature. The company sees Mozambique and Mphanda Nkuwa as its “proof of fire” (Lusa, 2008) to prove itself as a top multinational company. The project’s outcome will be determinant for the fate of the company's strategy in the medium-run, as Camargo is hoping that the project will take the company to a new level in its international presence and dimension.
The agreements about the model of financing and the details on the construction project have as a deadline to be finalized July 2009. By the mid-2008, Camargo Correa was looking for a big electrical operator, with Brazil’s Eletrobras being on the cards to assume this role and the tariffs being discussed between Camargo Correa and the government of Mozambique. Such negotiation will allow for the company to go on to present potential financial partners (including Exim Bank) with estimates of how profitable the energy production and exports will be in the long run for those interested. The decision over these tariffs are particularly important since they will have a major impact on the exports of electricity to South Africa and other SADC members, those that will be the major buyers of Mphanda Nkuwa's production.
China Exim Bank, as a financial partner which has been pushing with the building of the dam from an early stage of the project, is a very natural choice and the whole process would not have arrived at this stage without its actions and lobbying. In addition, the World Bank is also expecting a request for partial funding (Soren Ambrose, 2008), meaning that the perspectives for a partnership between Exim-Bank and the World Bank in financing the dam appears likely. This might not seem very significant at a first glance but actually, the very fact that those two institutions are now open to the possibility of a partnership of such nature reveals a very significant shift in their Africa strategy. This is also the case when it comes to how two of the major financial institutions operating in Africa today perceive and relate to each other. Instances of cooperation and coordination between Exim-Bank and the World Bank can go a long way to putting financial resources to more effective use in the continent as well as exponentially increasing the know-how and capacity for large-scale financing schemes such as Mphanda Nkuwa. It would also set up a scheme of checks and balances between the two institutions, even if just in occasional projects, and keep a healthy, desirable and practical dialogue between China and the Western Actors represented by the World Bank when it comes to their relationship with Africa.
From the Mozambican government side, Luísa Diogo had expressed back in 2007 (Jornal Notícias de Moçambique, 2007 A) that negotiations should be left to take their time and that government will not rush the project. The Prime-Minister expressed some worry that a project of such dimension would consume the great majority of international investment interest in Mozambique and leave forgotten other projects and other areas. Despite the risk that the negotiation process over-extended across time, Camargo Correa has now been given carteblanche to take the negotiations to the last phase. So, some stakeholders, particularly Camargo Correa and Exim-Bank are interested in having a steadfast initiation of getting the process of constructing the infrastructure up and running. Armando Guebuza in turn, the country’s head of state, sees Mphanda Nkuwa as an important step towards a fulfilment of Mozambique’s energy production potential that the President claims to be of more than 12.000MW. Within the framework of this wider ambition, government has set up a technical institute responsible for training in the areas of supply, transport, distribution and administration in the energy sector (Jornal Notícias de Moçambique, 2007 B). This is an instance of how China’s very interest in the infrastructure sector can also spur on Mozambique’s governance institution to improve, reform and expand to make the most out of investment opportunities that arise.
Finally, it is also worth noting that there are three possible forms of ownership in the electricity industry: 1) direct ownership by the government; 2) government-owned corporation; 3) privately owned corporation (Yi-Chong 2004: 31). Along the same lines, there are four possible forms in the structure of the power industry: 1) vertical/horizontal monopoly; 2) purchasing agency model (allows competition in generation); 3) wholesale competition (competition in generation and distribution); 4) retail competition (competition in generation, distribution and consumers) (Yi-Chong 2004: 2).
The Mphanda Nkuwa Dam consortium incorporates a mix between government-owned corporation and privately owned corporation but is led, thanks to a governmental decision, by a privately owned corporation, Camargo Correa. This means that the project will tend to privilege the characteristics and concerns usually assigned to privately-owned corporations. When it comes to the particular structure of Mozambique’s power industry, government has given room for wholesale competition to take place, with different companies applying for tendering in the construction of energy production facilities as well as for the building of distribution lines for the national grid. There is however no competition in retail, production and distribution since, “Electricidade de Moçambique” holds the monopoly of the consumer market.
6.3. Signs of Pragmatism from China’s actors

A contextualized analysis of the story of the negotiation process of the dam shows a notable sign of pragmatism from the Chinese side. Elsewhere in Africa, China has been obliged by the absence of power infrastructure to supply herself similar engineering developments in order to cater for the implementation of key projects such as raw material extraction. So if China’s initial interest in financing Mphanda Nkuwa follows the interests that were at stake in other similar projects in the continent, the way it goes around to advance them is different in practice. Looking at such projects like the Merowe Dam in Sudan for comparative purposes will allow for a better understanding of the extent to which the dynamics of China’s interest and practices in Mphanda Nkuwa are an exception or not. Merowe is a classic example of Chinese practices in the continent. It is a US$1.8 billion project whose negotiation, conditions and construction have some similarities with Mphanda Nkuwa. Merowe’s construction has been carried out by a consortium of two European and two Chinese companies and financed by Middle Eastern entities in partnership with Exim Bank. The very dimension of the dam is similar to Mphanda Nkuwa, set to produce 1250 MW of power (Burke, 2007). As with the Nkuwa Dam, the political debates regarding Merowe have also revolved around the displacement of people as well as the reliability (and at times even existence) of feasibility studies. The Sudanese government is expected of having to organize the relocation of more than 50.000 people. In the negotiation process of the Merowe dam, China managed to win a second contractor for power towers to transport electricity to Khartoum and Port Sudan, Harpin-Jilin and CCMD joint venture respectively for US$10 million. According to Askouri (2007:76), a “inside source said Sinohydro (engineering) told Zesco (Zambia Electricity Supply Limited) that they wanted to see a site assessment focused only on economic factors”. This has been one of the similar critiques that Mphanda Nkuwa has been subject to, i.e. which is overly concerned with economic viability for the investors and disregards sustainability and environmental aspects.
It is apparent that, when carrying out a project like Mphanda Nkuwa, China often contracts its own domestic companies such as Sinohydro. However, Mphanda Nkuwa’s case holds some particularities. First of all, although the opening of the Mozal II aluminium smelter has increased overall industrial demand for electricity, Mozambique already holds an energy surplus that is more than enough to meet its meagre internal consumption, even if the consumption of families greatly expands in the near future. These circumstances are likely to continue until the majority of the population actually gains access to electricity and consumption picks up. Secondly, the Brazilian engineering company Camargo Corrêa has, as above mentioned, been attributed the task of carrying out the construction and organise for the financing of the dam. The economic diplomacy of Mozambique’s government and the valuable know-how of the Brazilian engineering company have pushed China, or more precisely one of its key foreign policy-making actors, Exim-Bank, to adjust its traditional modus operandi. This time, the model followed has more similarities with the Merowe Dam scheme: China Exim-Bank has third party involvement in a kind of deal that is usually a bilateral agreement between two governments and relies upon Chinese financing of a Chinese-constructed project.
It is possible that this project could prove to be just an exception proving the rule that China’s preference for vertical integration of its investments will not change. It does nonetheless send out an important sign that China’s investment and loan packages are likely to become more flexible and innovative. There are two reasons as to why this development is not surprising: firstly, China has an unremitting tendency to be pragmatic in its foreign affairs and economic diplomacy, an inclination of which the Mphanda Nkuwa project is a good example; secondly, as its engagement with the international market increases, the business practices of China Exim-Bank will, just like the practices of other Chinese MNCs, tend to go beyond the most immediate interests of the PRC State Council and acquire a fluid and more autonomous dynamic of its own. Hence, the Mphanda Nkuwa case stands as a reminder that both the grand and the minor narratives of China’s engagement of Africa are anything but static and can no longer be encapsulated in the maxim of “Chinese financing for Chinese-built and engineered projects”. The process leading up to the construction of Mphanda Nkuwa has showed signs of pragmatism and flexibility on behalf of the actors defining and executing China’s engagement with Africa from the Chinese side.
6.4. The regional dimension of China’s strategic approach

The significance of the dam increases at a time of a major electricity crisis for South Africa, the major power consumer in the region. Its national energy company, Eskom, is struggling with its outward investment expansion strategy and is now negotiating to buy an additional 250MW of electricity per day from Mozambique’s Hydroeléctrica de Cahora Bassa (HCB). South Africa even considers moving into two time zones for energy saving purposes (Yeld, 2008). The stage is set for the country to gradually become a “dynamo” for the Southern African region, and also for China to play a role. The output of the dam is closely tied to the reality of regional energy security. South Africa is set to be the main purchaser of the electricity produced by the dam while other countries in the region such as Malawi and Zimbabwe are also expected to purchase it. The interdependence of the countries in the region when it comes to energy is so evident to the point that Mozambique is expected to come through as the leading supplier in the region (Engineering News 2008). Mozambique is in fact connected to the Southern Africa Power Pool (SAPP) through South Africa and Zimbabwe but at the same time Mozambique still faces serious difficulties in electricity distribution, particularly in rural areas. This is reflected both in an ADB report and in WB investment Climate Report (2006) about Mozambique in which “64% of the sampled companies have identified energy as being a major problem with 17 power cuts registered per month”. This shows evidence of two interlinked paradoxes: one between Mozambique’s energy production potential and the actual energy production/distribution; a second between energy revenues and the internal capacity of Mozambique for generalizing its benefits across population and businesses.
Considering other mega-projects in the region, a dam such as Mphanda Nkuwa seems like a considerable safe investment economically given the current regional setting when it comes to energy production and consumption. This is so because “electricity is not a normal good that consumers can pick and choose at a market where there is a free exchange system”, electricity is a necessity and its demand is inelastic vis-à-vis pricing (Yi-Chong 2004: 3, 327). It means that, even if there is an economic downturn in the region, as long as a wide distribution network remains in place, demand is still likely to remain at a considerably high level.
Figure 8 - SADC energy sector snapshot
Source - (ADB 2006:7)
Figure 8 shows that a great majority of commercial energy consumption in the region pertains to electricity in detriment of petroleum products and coal. It also confirms the low levels of internal energy consumption and access rates of Mozambique vis-à-vis other countries in the region. Notwithstanding that, the most interesting evidence from the graphs is how, in the medium term (2008-2015) currently installed capacity will need to increase in order to meet the predicted evolution in demand.
The Mphanda Nkuwa project shows, all things considered, evidence of how China is increasingly having a regional approach, even to its country specific investments. After noting how China takes into account regional demand and dynamics when evaluating the economic viability of the output of the dam, one can extrapolate that there is a clear regional dimension to China’s strategy, even in one-off projects. This is due to the fact that producing energy for internal consumption is not yet commercially viable but also that investors can make the most out of Mozambique being part of the SAPP. The regional dimension of China’s involvement in the energy sector in general and in projects such as Mphanda Nkuwa in particular are instances of how China’s engagement can comprise sets of relations fostering absolute gains for those involved. In this particular instance, by connecting its investments to the SAPP, its activities will contribute to the economic integration of regional blocs such as SADC, of which Mozambique is a part of. China is also promoting political and economic integration between Mozambique and its neighbours by means of spill-over effects borne out of the necessity of finding effective solutions for new challenges and opportunities.
6.5. How will the Dam affect Mozambique’s development?

Mozambican politics have been characterized between 2000 and 2008 by the hegemony of decision-makers in the capital over those in local government. Local government has however, historically, often worked around a de facto incapacity from the authorities in the capital to effectively apply decisions taken by central government all the way to isolated peripheral regions (Cuereneia, 2001). This makes it important for a closer analysis of the dynamics between central and local government in the Zambeze region, the region where the dam is set to be constructed.
Given this, the area surrounding the building site of the dam is prominently rural, often with isolated families and villages living spread out around the mountainous areas labouring in local subsistence agriculture, cattle herding and traditional crafts such as carpentry and pottery. One must however understand that the sets of local political relations as being organized around a simple subsistence agriculture economic dynamic is somewhat oversimplifying. In fact, there are considerable inner-group and inter-group power inequalities which add another problematic dimension, locking some of the subsistence farmers into forms of dependency (Morrissey 2006). The presence of a project of such dimension and nature contrasts sharply with the immediate picture of the local micro-economic dynamics. This contrast is an ironically fitting allegory of the challenges Mozambique’s macro economic structure faces. Mozambique’s government has previously been accused of claiming credit for almost “miraculous” growth rates which are sometimes overwhelmingly dominated by the contribution of mega-projects. Mphanda Nkuwa constitutes one of these very projects. This critique arises from studies that have broken down the picture of how different strata and socio-economic groups have benefited distinctively from these high growth rates. This however is not straightforward as the true nature and impact on poverty of Mozambique’s economic development remains widely debated (Arndt 2007).
The main potential risks envisaged in the construction of the dam encompass, first of all, the building of the dam in a potentially seismically risky area. There are not only the traditionally risks related to “reservoir induced seismicity” but there are also chronic liabilities in the collection of seismic records. Mozambique is “in vicinity of Nubia Somalia plate boundary and straddles a highly active fault zone called the shire though” (Lemos & Ribeiro, 2007:67). In addition, besides floods, draught remains a primary concern for the local population. The arrival of the dam will change the patterns of river flow with uncertain risks and consequences for those who have traditionally relied on it.
A useful way of looking at what are, for the purposes of this project, the most relevant socio-economic aspects of the building of the Dam is dividing them into two categories as IRN (2006) did for its study: those related to construction and those caused by dam operation. In regards to the former, the very action of building the dam entails specific changes for the populations residing in the local construction site. Characterized by a traditional absence of central state in its socio-political organization these traditional groups will be subject to absorbing a considerable wave of immigration from urban areas to work in the mega-project. Critics claim that, despite greater economic and commercial activities and new job opportunities, there can be a likely increase in the rates of crime and HIV/AIDS. To that, one must add the obvious task of resettlement with the first estimates point to a number of up to 200.000 people who will have to move. To the construction of a dam of great proportions, a change of great proportions corresponds. While IRN focused solely on the implications for the local populations this chapter will use this distinction between risks/challenges related to dam operation and those concerning the dam construction and apply them to the realms of economic diplomacy.
Reports such as that of Justiça Ambiental (IRN, 2006) defend that the dam will lead to greater severity in droughts with subsequent humanitarian catastrophes and food security problems fruit of lower and more unstable levels of water in the Delta. It follows the train of thought of arguments that claims that China Exim Bank’s involvement in Nkuwa has removed the pressure on Mozambique government to improve social and environmental assessment (Lemos & Ribeiro, 2007:68). Justiça Ambiental and IRN offer as alternatives a set of other options such as micro-hydro, solar panels, windmills, biofuels from sugarcane waste and even improved cooking stoves (IRN, 2006). These can undoubtedly be important complements that can be used simultaneously with dam power but some doubts can be posed in terms of to what extent these constitute viable alternatives if the objective is to commercialize and export electricity in large quantities. In contrast to this antagonistic position towards the dam by a considerable section of organized civil society, the government and other economic agents defend the exact opposite (Jornal Notícias de Moçambique , 2007 A). The project is seen by authorities not just as being economically sound but it also as having an advantage to allow for a greater degree of control over the river flow and avoid floods. In fact its economic viability is not certain, and it seems like the dam is particularly vulnerable to climate change, and natural catastrophes. A case in hand is the upstream Kariba dam which has been operating at 14 percent of its capacity due to recurring droughts. Taking into account climate change also assumes particular relevance as Southern Africa is one of the regions in the world where its impact in the form of desertification and droughts are most likely to become more significant in the medium/long term (Brown et al. 2007; Eriksen et al. 2007).
These debates and challenges once again point to the importance of going beyond the mere quantification of the potential impacts and implications of the dam. Any macro economic and macro-political analysis needs to be complemented by an understanding of the micro-economics and the micro-politics as well as outside-in thinking. In itself, the project holds some very interesting overlapping challenges when it comes to transnational issues such as those of social and environmental responsibility issues and even taxing (Bucuane & Mulder 2007). The most important is for the rents from electricity exports to be successfully distributed and re-invested productively into the economy. The sheer dimension of the dam means that once the project goes past its tendering phase and kicks off, Mphanda Nkuwa will become a flagship in Mozambique’s energy strategy. It is therefore of the utmost importance that the Mozambican government, because of its privileged position as a rent collector, tries to see that it benefits as many people as possible. Just like in Soderbaum and Taylor’s analysis of the Maputo Development Corridor (MDC) initiative and the role of the state: flaws, disregard and state-elitism in a mega project like Mphanda Nkuwa “reinforce the role of the state as a transmission belt for international capital, rather than as a facilitator for development” (Soderbaum & Taylor, 2001:676).
In brief, the double conceptualizations of the state as a “transmission belt” and as a “facilitator for development” encapsulate the unit of the state and more precisely the government into a useful analytical dichotomy. It presents a variation from the state as an actor that operates as a transmission belt, this concept presenting an understanding where the state carries out the task of being the “disciplining spokesman of transnational capital”. This contrasts with Cox’s (1996) view of the state as a “‘buffer’ protecting the domestic economy from harmful exogenous influences”, the function of the state that should be aspired to. To Cox’s ideal type one can add not just the protection function of the state but also its role in potentiating positive exogenous influences. These two contrasting conceptualizations of the role of the state really point out to how the government of Mozambique must, at the end of the day, be more aware and active regarding the concrete impacts China is having in its economic development, concerning both threats and opportunities. The MDC’s paradigm was characterized by “short-term, capital-intensive and large scale investment, with a minimal degree of state involvement.” Some flaws of this paradigm seem to have been repeated with Mphanda Nkuwa. As in the case of the MDC, and other Mega-Projects, local populations were not really consulted before and during the process of planning and execution of the projects and “integrated into the decision-making” (Soderbaum & Taylor, 2001:688). The dam remains nonetheless a big macro-economics “chess-move” whose impact and benefits can still be broken down and sieve through to those who most influence an improvement in the economic development performance – local poor rural classes. For this to happen however government will have to properly manage the taxes collected from the newly exported electricity from the dam. Mozambique has adopted a strategy concerned with “increasing the profile and credit rating of the region” (Soderbaum & Taylor, 2001:686; Business Map 2000:37). The country needs to avoid the over prominence of deals “between the political elite and transnational capital” that restrictedly benefit these two. There must be a distinction between a government that transfers its responsibilities by giving full autonomy to a company to carry out all the “grunt” work, managing the risks of a project and a government that provides incentives and stimulates new and innovative investment models. The Government of Mozambique needs to distinguish between utter carelessness and l’état stratége .
Even back in 2001 Soderbaum and Taylor already pointed out to how there were no institutions that were able to “facilitate dialogue with bottom-up forces in society” (Soderbaum & Taylor, 2001:692). And despite the positive openness from China to adapt and change its investment models as required, the dialogue remains restricted to elite to elite forces in society. In fact, the very objective of producing 12.000 MW mentioned by Armando Guebuza and referred to in the previous section of this chapter has still fallen short of being achieved and much of the energy produced by Mega projects stands to benefit, above all, other mega projects. These are projects such as the heavy sands exploration of Chibuto and Moma as well as Mozal III aluminium smelter, businesses that depend on a reliable and cheap supply of energy. This creates a case of double economy and a closed elitist circle of investment sustaining the arguments pointing to the paradox of growth vs. inequality. Most strikingly, Mozambique’s strategic option of trying to produce energy in greater quantities for exporting purposes brings about an extremely visible paradox when one looks at its internal consumption: what will a dam producing 2500 MW for export do to a country where households still rely on “bio-mass in the form of charcoal and firewood for 80-90% of its internal energy consumption” (Ghazvinian, 2008).
6.6 Conclusion

This chapter has given a review of the tendering process of Mphanda Nkuwa. It has concluded that the genealogy of the dam shows significant signs of pragmatism from Chinese actors in Africa and particularly Exim-Bank as the bank demonstrates increasing openness to reinventing its partnership and investment models. Saying that, these changes also come at a time when more autonomous actors plan out the investments and projects bet upon by taking into account a regional framework. Finally, in a nutshell the answer to the question “who will benefit from the dam?” stand with the government which will collect the revenues from electricity exports, since the economic benefits from the construction of the dam itself are short and circumstantial. There is still a need for the Mozambican government to move from being a “transmission belt” for China’s transnational capital to a “facilitator of development”.
Mozambique governance structures should simply allow for China to displace Western partners and have short-term profit-seeking deals, but actually tap and adapt China’s commitments on an individually tailored, project-by-project basis. The Mphanda Nkuwa project has not been without its critics. Serious questions have been raised regarding the displacement of people that the dam might cause. Furthermore, there have been criticisms regarding the reliability of the feasibility studies that have been conducted. IRN and the NGO Justiça Ambiental are two of the most vocal groups demanding further studies. Some of their representatives were even lobbying Chinese stakeholders during the ADB meeting in Shanghai in 2007 (IRN, 2007).
Mozambique must now also look at starting to make the most out of investments that are already there, by creating incentives for these businesses, previous investments and mega-projects to stay and expand. This would be a new welcomed trend given recurrent suggestions for a greater focus on capacity-building instead of simple carefree liberalization. As long as the construction process is successful, it will be a political decision if Mphanda Nkuwa is economically successful and if it will benefit a wide constituency or not. The nature of economic impact is similar to those pertaining to other mega-projects and same development benefits and limitations apply but in this case the Government of Mozambique has been delegating its responsibilities to Camargo Correa which will have a great say in determining the modality of the financing and construction process. Meanwhile the Government of Mozambique will retain the last word in the economic development impact of the dam which will depend on the re-distribution and re-investment of the significant rents that will be collected from exporting the new produced energy.