VZCZCXYZ0000
RR RUEHWEB

DE RUEHTO #0599/01 1431505
ZNR UUUUU ZZH
R 231505Z MAY 06
FM AMEMBASSY MAPUTO
TO SECSTATE WASHDC 5420

UNCLAS MAPUTO 000599 
 
SIPDIS 
 
SIPDIS 
 
AF/S FOR HTREGER 
EB/IFD/ODF FOR JGARBER 
USAID for AA/AFR and AFR/SA 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: EINV ECON EAGR ETRD MZ
SUBJECT: Mozambique - World Bank Apparently Pushing Use of 
Sena Line for Moatize Coal 
 
Ref: Maputo 422 
 
Sensitive But Unclassified - Handle Accordingly 
 
¶1. (SBU) Summary: Two World Bank railway specialists 
recently visited Maputo, urging the GRM to support a final 
definitive study comparing the Sena railway line with the 
Nacala railway corridor for the export of coal from Moatize. 
We told them that we would not oppose a study, but that we 
thought Nacala was preferable and that we understood this 
was the view of the Brazilian coal mining company awarded 
the Moatize concession, Companhia Vale do Rio Doce (CVRD). 
On May 22 a senior GRM official queried the Ambassador on 
"why donors were all supporting using the Sena line" for 
Moatize coal.  She emphasized that the decision on which 
line to transport the Moatize coal is a commercial one, but 
that informal assessments USAID had undertaken indicated 
that the use of the Nacala corridor would be more efficient 
than the Sena line.  It appears that the World Bank is 
making a final push to have the Sena line used for Moatize 
coal.  End Summary. 
 
World Bank Study 
---------------- 
 
¶2. (SBU) On May 9 retired World Bank railway specialist for 
Mozambique, Yash Kedia, and current World Bank lead 
transport specialist for the Africa Region, Anil Bhandari, 
met with emboffs briefly over lunch to discuss using the 
Nacala corridor as a export railway for coal from the 
Moatize region of central Mozambique.  Kedia and Bhandari 
told emboffs that they felt the Nacala corridor option was 
favored over the much shorter route via the Sena corridor 
without sufficient justification.  They asked emboffs 
whether the USG would stand in the way if the World Bank 
contracted a study, to be conducted in a matter of weeks in 
the next month or two, to compare definitively one railway 
corridor with the other.  The respective ports for each 
corridor would be part of the comparison.  They claimed that 
they wanted to ensure that the GRM opted to support the most 
cost-effective route.  They added that they would be seeing 
Mr. Munguambe, Minister of Transport, later that day to urge 
his support for such a study, and that they would make a 
similar case to the Ms. Bias, Minister of Mineral Resources. 
 
¶3. (SBU) Emboffs answered that they had no objection to such 
a study, although they added that the matter had been 
examined several times and the consensus favored Nacala. 
They pointed out that our position for some time had been to 
support the Nacala line over the Sena line for the export of 
coal from Moatize because of Nacala's deep water port. 
 
Background 
---------- 
 
¶4. (U) In December 2004 the World Bank announced a USD 110 
million loan to the GRM for the repair and upgrading of the 
Sena railway line.  That same month, the GRM awarded the 
Brazilian mining company, Companhia Vale do Rio Doce (CVRD), 
mining rights to the Moatize coal basin.  In the intervening 
16 months, CVRD engineers examined the two main export 
corridors for Moatize coal -- via the Sena line or via a 
spur to the Nacala railway line and apparently came to the 
conclusion that using the Nacala line and the deep water 
port of Nacala was preferable to the Sena line and its 
shallow water port at Beira.  To this end, on March 31, 
2006, CVRD and the US/Mozambican consortium operating the 
Nacala line reached an agreement giving CVRD the option, 
until the end of 2006, to buy them out as managers of the 
Nacala line (reftel). 
 
Donors Favor the Sena Line? 
--------------------------- 
 
¶5. (SBU) On May 22, at a lunch at the Portuguese 
Ambassador's residence, President Guebuza's chief of staff, 
Antonio Sumbana, asked the Ambassador why the World Bank now 
claimed that donors were all supporting using the Sena 
railway line to export Moatize coal rather than the Nacala 
railway corridor, which CVRD preferred "for commercial 
reasons."  The Ambassador, surprised by the question, 
responded that the decision of how to export Moatize coal is 
a commercial one.  She indicated that USAID informal 
assessments and discussion of this topic last year had us 
all agreeing that the Nacala line made more sense because of 
Nacala's deep water port.  She noted that we had been told 
by CVRD and others that the use of the Sena line required 
 
 
the building of a 15 km pier out into the ocean, and still 
dredging would be required because waters around the port of 
Beira are very shallow.  She stated that more than a year 
ago we had registered our doubts with the World Bank over 
the economic viability of rehabilitating the Sena line since 
we did not think it could be made viable to export Moatize 
coal.  Ultimately, the choice should be up to CVRD in terms 
of which route was most viable commercially, she reiterated. 
 
Comment 
------- 
 
¶6. (SBU) Judging from Sumbana's question, it appears that 
the World Bank railway experts are twisting our non- 
objection to a study comparing the two corridors into 
outright support for the Sena line.  This, of course, is not 
the case at all.  From our vantage point, it appears that 
the World Bank is making a last ditch effort to shore up its 
USD 110 million Sena line rehabilitation project, which 
would be much less economically justifiable should Moatize 
coal be carried out via the Nacala corridor.  We will seek 
to clarify this with the World Bank locally. 
 
La Lime