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Gas industry

Clinton Administration Intervenes to Save Enron Deal in Mozambique

Strategic Insights

— 1 min read

The Clinton administration stepped in to rescue Enron Corp's planned development of Mozambique's Pande natural gas field from cancellation after the country's Energy Minister, John Kachamila, abrogated a memorandum of understanding on the project. In response to Kachamila's letter, National Security Adviser Anthony Lake ordered the suspension of $13.5 million in aid to Mozambique until the government confirmed it would abide by the Enron agreement. The US pressure ultimately led to Mozambican President Joaquim Chissano reaffirming the country's commitment to the deal, and aid was restored.

Key Takeaways:

  • The Clinton administration intervened to save Enron's Pande natural gas project in Mozambique after the country's Energy Minister, John Kachamila, attempted to cancel the agreement.
  • National Security Adviser Anthony Lake ordered the suspension of $13.5 million in aid to Mozambique until the government confirmed it would abide by the Enron agreement.
  • Mozambican President Joaquim Chissano reaffirmed the country's commitment to the deal after being pressured by the US, and aid was restored.
  • The Enron deal had received the blessing of Chissano, as well as Mozambique's prime minister and finance minister, prior to Kachamila's attempt to cancel it.
  • The South African consortium's rival bid to develop Pande may have prompted Kachamila's attempt to spoil the Enron deal, with US sources suggesting that he had entered into negotiations with the South Africans and potentially received attractive terms for himself.
  • The Enron deal faces basic problems, including the need for sales in South Africa to make the project viable, with State utility Eskom and potential industrial customer Sasol being major hurdles.
  • Vice President Al Gore's visit to South Africa on December 6 is crucial for clearing the hurdles to the Enron project.

Statistics:

  • The Enron deal was valued at $650 million.
  • The Clinton administration had committed $13.5 million in aid to Mozambique, which was suspended after Kachamila's letter.
  • Enron International Managing Director Jay Fudenburg had pursued the Pande deal for two years before the US intervention.
  • The White House warned Mozambique that future aid would depend on completion of the Enron deal.

Sources:

  • "THREAT FROM THE US SAVES GENT" by David R. Francis, Energy Weekly, November 25, 1995, p. 1-6.
  • "Enron Faces Trouble in Mozambique", Los Angeles Times, November 15, 1995.
  • "Gas Deal Hinges on South Africa's Stance", New York Times, November 18, 1995.

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