Mozambican state power company Electricidade de Moçambique (EdM) is charging an electricity tariff that is lower than cost, which in the short term could have serious implications for its business, the company’s chairman said recently.
Noting that a figures of 10 or 12 metical cents as the “ideal” figure, Augusto de Sousa Fernandes said that the current tariff of 8 metical cents per kWh “is not sustainable” as the company pays around 9 cents.
In an interview with daily newspaper Notícias, Sousa Fernandes said that the cost for the company to buy electricity rose from US$63 million in 2011 to US$84 million in 2013, in line with annual growth in consumption of around 70 megawatt-hours (MWh), without the price to the consumer changing.
The rise in energy consumption, mainly driven by the domestic market, is forcing the company to find more expensive alternatives to the Cahora Bassa Hydroelectric dam, such as the Ressano Garcia thermoelectric ºplant, currently managed by Scottish company Aggreko.
“This year the cost will be US$133 million as Aggreko comes in. Just as an example, for 500 MWh from HCB we pay US$50 million per year and for just 150 MWh from Aggreko we pay the same amount,” he said.
According to Sousa Fernandes, just 26 percent of the Mozambican population has access to electricity and consumption is split as 70 percent for the domestic market and 30 percent for the industrial market.