Mozambique Energy: HCB marks historic Cahora Bassa transfer, cuts capex

HCB - Pedrocouto1022
Pedro Couto, HCB CEO

Hidroelectrica Cahora Bassa (HCB), the Mozambique concession company which operates the Cahora Bassa dam and the 2 075 MW hydropower plant, is poised to move into a period of sustained investment, having settled all debt associated with the 2007 transfer of ownership of the scheme from Portugal to Mozambique.

HCB will commemorate the historic $800-million transaction at a ceremony to be held on site in Songo on November 27, precisely ten years to the day after the conclusion of the deal. Since that date, HCB has been 92.5% owned by the government of Mozambique, with Portugal-listed utility Redes Energéticas Nacionais holding the 7.5% balance.

The event will be attended by dignitaries from Mozambique, Portugal and South Africa and will highlight not only the operational and financial performance of Cahora Bassa since 2007 but also the progress made in transferring the skills needed to operate the scheme to Mozambican nationals. The scheme currently employs 740 people, the overwhelming majority of whom are from Mozambique.

 

Cahora Bassa
Cahora Bassa Dam is located in Tete province, center of Mozambique

 

Executive chairman Pedro Couto, who was appointed in September 2016 has been mandated to strengthen HCB as a commercially viable power producer and to seek and participate in profitable energy projects, which have a positive return on investment.

An immediate priority is the modernization of the hydropower scheme following the successful completion of the debt repayment process, which was, in fact, concluded a year ahead of schedule.

It is envisaged that HCB will undertake a series of projects over the coming ten years that could involve capital expenditure of around  €500-million. The projects will be phased across the five-turbine facility so as to ensure uninterrupted electricity production.

Most of the electricity generated at Cahora Bassa is still sold to South Africa through a 1 420-km high-voltage transmission line, which runs from Songo, in central-western Mozambique, not far from the borders with Zimbabwe and Zambia, to the Apollo converter station, in South Africa’s Gauteng province. However, some of the electricity is also sold domestically and to neighboring Zimbabwe.

HCB has a firm contract to supply Eskom with 1 150 MW at an average R0.36/kWh, with tariff negotiations for the next five-year period set to get underway in 2018.

 

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Director for studies and projects, infrastructure and hydrology Nelson Beete

Director for studies and projects, infrastructure and hydrology Nelson Beete tells Engineering News that the modernization project can only partially be funded from internally generated revenues. HCB is, therefore working on a funding plan, which is likely to involve both development and commercial finance.

 

In addition, studies are continuing on the possible development of the 1 500 MW Mpandha Nkuwa hydropower project, some 60 km downstream of Cahora Bassa. However, the timing of the Mpandha Nkuwa project will depend on government processes and on market developments, particularly in South Africa, which could be an anchor client. Eskom currently has a surplus domestic capacity, owing to falling demand.

Beete reports that attention is also being given to ensuring Cahora Bassa’s climate resilience, particularly considering the prospect of prolonged droughts, which could affect the flow of the Zambezi river.

In December 2016, the water levels in the scheme’s reservoir fell to its lowest level in history as a consequence of a prolonged drought across the Southern African region. Bette says the water level has since recovered but is only likely to reach design capacity during the 2017/18 rainy season.

Owing to the fact that Cahora Bassa is situated downstream of several other Zambezi river schemes, including the Kariba dam which is jointly owned by Zambia and Zimbabwe, HCB is also intensifying its cross-border cooperation efforts in a bid to ensure that its operations are not disrupted by planned or unplanned developments.

A joint operations technical committee, or JOTC, has been established to oversee developments on the Zambezi and to share information on hydrological, environmental, dam safety and operational issues, as well as on key projects, including the current rehabilitation of Kariba dam, 500 km upstream.

A few years ago there were fears that the Kariba dam, which is the largest human-made reservoir in the world, was at risk of failure. However, Beete says that HCB has received assurances that the $295-million rehabilitation effort will restore the integrity of the 128-m-high wall.

“We are confident that HCB has a bright future and have set our sights on making the necessary investments to ensure that the plant will continue to be a reliable source of electricity supply for decades to come,” Beete concludes. (source: Miningweekly)

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