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File photo / Amado said that in the last seven years there have been three price rises – in November 2015, October 2016 and August 2017 “all duly approved by the government, as the law determines, and broadly divulged to the clients and the public at large through the mass media”.
Mozambique’s publicly-owned electricity company, EDM, on Thursday denied reports circulating in social media that the company is surreptitiously raising electricity prices, or has corrupted the pre-paid meters (known as Credelec) so that they give exaggerated readings of power consumption.
Speaking at a Maputo press conference, EDM spokesperson Luis Amado said these claims are entirely false. Electricity price rises “take place within a legal framework established by the state and are public knowledge”, he stressed.
Amado said that in the last seven years there have been three price rises – in November 2015, October 2016 and August 2017 “all duly approved by the government, as the law determines, and broadly divulged to the clients and the public at large through the mass media”.
The previous government, under President Armando Guebuza, had imposed a freeze on electricity prices after the riots against price increases of September 2010. This meant that by 2015 EDM was selling power for around half the price it had to pay for electricity generation, or purchasing power from its suppliers (such as HCB, the company that runs the Cahora Bassa dam, or the South African electricity company Eskom).
In 2015, Amado said, EDM’s average cost of acquiring energy was 10.5 US cents per kilowatt-hour, while the average price of selling electricity was five cents per kilowatt hour. “This situation prevailed for a long time and led the company to an unsustainable economic and financial situation”, he stressed.
The three successive price rises, he continued, “greatly improved EDM’s ability to support operations, and it managed to implement structuring projects which brought more security and improved the quality of electricity throughout the country”.
This included restoring and expanding the substation in Matola: breakdowns here had plunged Greater Maputo and much of southern Mozambique into repeated power cuts. A new transmission line from Ressano Garcia to Macia, in Gaza province had improved the supply of power to Gaza and the neighbouring province of Inhambane.
In the centre of the country, the power stations at the Chicamba and Mavuzi dams on the Revue river were rehabilitated, and the Chibata sub-station was expanded. This work, plus a new transmission line from Chibata to the town of Dondo “have eliminated the power cuts and restrictions in Sofala and Manica provinces”, said Amado.
In the north, measures such as a diesel-fired floating power station at Nacala, although expensive, improved the availability and quality of power.
Amado said that 27.2 per cent of the Mozambican population enjoys access to electricity from the national grid operated by EDM. This does not include those households and institutions that are supplied from solar panels.
Asked whether EDM intends to increase its prices this year, Amado said this would depend on the company’s evolving cost structure. Currently the price of acquiring power and the price at which EDM sells it are almost in balance. The current average price at which EDM acquires power has fallen to 10 US cents per kilowatt hour, while the average sales price has risen to about 9.3 cents per kilowatt hour.
But that could easily change. Amado points out that almost everything EDM buys is denominated in foreign currency. Although HCB is a Mozambican company, the power it sells to EDM is denominated, not in Mozambican meticais, but in South African rands. The exchange rate of the metical against the dollar and the rand is thus a determinant factor in whether EDM will need to ask the government for a price rise later in the year.
EDM had run up a debt equivalent to 80 million dollars to HCB, but Amado expected most, if not all, of this to be paid off in the first half of this year.
Among its customers, EDM faces problems with state institutions that do not pay their electricity bills on time. The current debt of the state to EDM is around 280 million meticais (about 4.6 million dollars). Amado added that, in his many years of experience at EDM, the state always pays its debts eventually. But the delays could cause EDM cash flow problems in the short term.
He thought the problem was being brought under control because by now about 80 per cent of state institutions buy their electricity through the Credelec pre-paid meters. The most sensitive area is the debt of institutions that cannot be disconnected, such as the public hospitals. Amado said EDM is in “cool-headed discussions” with the government about paying off this debt.
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