According to a joint communique after economic and trade talks between the two leaders in Mozambique's northern coastal city of Pemba, "the memorandum aims to provide an investment-friendly environment in the energy sector on the Zambezi Valley".
The main energy project on the Zambezi valley is the construction of a 2 500MW hydroelectric dam, just south of the existing Cahora Bassa dam.
The 1,3-billion dollar Mepanda Uncua dam project would meet power needs in Mozambique and in neighbouring states and end the monopoly enjoyed for years by South Africa's Eskom.
The latest energy pact is one of the more than 20 agreements that the two neighbouring states have signed since 1994, including protocols and memoranda of understanding.
Cahora Bassa was built by Portugal the former colonial power in Mozambique.
Most of the electricity produced there was contracted out to Eskom.
Mozambique's electricity supply firm EDM currently supplies southern Mozambique with power bought from Eskom.
Chissano and Mbeki's meeting yesterday was part of regular consultation of talks aimed at boosting the two countries' social and economic development.
South Africa is Mozambique's main trading partner and leading investor followed by Britain and Portugal.
At least 57% of Mozambique's imports emanate from South Africa, representing about 18% of all South Africa's export volumes to Africa.
About 26% of Mozambique's exports are destined for South Africa.
South African firms are ahead of key development and job creation projects in Mozambique.
They lead in such major and multi-million dollar projects as in aluminium smelting, construction of a pipeline to transport natural gas from southern Mozambique to South Africa, the Ressano Garcia railway linking the two countries and airport operations. – Sapa-AFP.
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