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May 17, 2010

Mozambique: Struggling biofuel company catches up with wage arrears

The biofuels company Energem, operating in the southern Mozambican province of Gaza, has completed the payment of two months wage arrears and redundancy pay to its 297 workers, according to a press release from the Labour Ministry.

The company has paid around 4.5 million meticais (about 136,000 US dollars), and the majority of the workers have lost their jobs, at least temporarily.

The workers had not been paid their wages for March and April, due to the company's alleged financial difficulties. Energem has not yet begun producing biofuels, since it is still developing a 2,000 hectare plantation of the shrub jatropha.

Energem, which is owned by South African and British interests, says that it will not declare bankruptcy and will instead seek other partnerships to help revive the project. It says that, in coordination with the provincial and district governments, it decided to compensate the workers while awaiting developments.

The company has also channeled to the National Social Security Institute (INSS) the contributions deducted from the workers' wages, amounting to 1.8 million meticais.

Only nine workers, who signed new contracts, were left in the company, to guarantee security of the premises and the equipment, while the employers are preparing to resume activities. The workers who were made redundant may be called back, but will have to sign new contracts if they wish to return.

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