VTB halts Mozambique sovereign debt plan after clashes

VTB halts Mozambique sovereign debt plan after clashes
Published: 23 August 2013
Rebel clashes with government forces in Mozambique has 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, known as Renamo, said they killed 36 soldiers in a clash earlier this month, a claim refuted by the government, which said only two people died.

Renamo, which fought a 15-year civil war against the ruling Frelimo party until 1992, this year attacked arms depots and buses in central Mozambique, forcing the closure of rail lines used by coal mines owned by Rio Tinto Plc.

"The situation has changed. In past years there was like a silent agreement" between Renamo and Frelimo, Amilcar Barros, a director of VTB's African unit, said in an interview yesterday in his offices in Luanda, Angola's capital.

"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, Barros said, declining to be more specific.

The bank, which bases its African operation in Angola, Africa's largest crude oil producer behind Nigeria, is considering oil and gas investment in both nations as well as Uganda, Barros said.

A ports project in Namibia was also assessed. 
- Bloomberg


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