Mozambique Energy: “HCB must expand portfolio,” says chairperson

Hidroelectrica de Cahora Bassa (HCB), the company that operates the Cahora Bassa dam on the Zambezi river, in the western Mozambican province of Tete plans to expand and diversify its business portfolio, to mitigate the risk of concentrating its entire assets in one place.

Speaking in Maputo on Tuesday, at the annual meeting on HCB’s performance, the company chairperson, Pedro Couto, said the major challenge is to take over the planned dam at Mpanda Nkua, on the Zambezi, 60 kilometres downstream from Cahora Bassa. Last week, President Filipe Nyusi stated publicly for the first time that the government wants to put HCB and EDM in charge of Mpanda Nkua.

A company to operate the planned new dam, HMNK, was set up years ago, but did not get much further then initial studies. HMNK was a consortium between the Brazilian company Camargo Correia, the Mozambican group Insitec and EDM.

However, Camargo Correia and Insitec appear to have been bought out by a Dubai-based company, Manannan Hydro. Couto said he had never heard of this company before, and suggested that journalists should approach the Ministry of Mineral Resources and Energy.

But the Dubai company certainly exists, as does a contract which it signed with the Mozambican government on 20 March 2017 (when Leticia Clemens was Minister of Mineral Resources and Energy). According to the Zitamar News Agency, Manannan Hydro (owned by a member of the Dubai royal family), would buy out Camargo Correa and Insitec for 8.9 million dollars and would have control over 60 per cent of HMNK

Couto denied all knowledge of this deal, although he was the Minister of Mineral Resources and Energy prior to Klemens (who only spent about ten months in the job).

Manannan Hydro boasts on its website that it will be building not only the dam but also the transmission line from the Zambezi Valley to southern Mozambique. The dam will generate up to 1,500 megawatts in phase one, which could be increased to 2,500 megawatts in phase two.

The Dubai company planned to secure initial funding in 2018, and obtain the necessary Mozambica n licences and approvals in 2018 – but so far there is no sign of this happening.

Couto declared that Mpanda Nkua is vital or the country, and believed, on technical grounds concerning water flow, that it should be built before a second power station at Cahora Bassa, on the north bank of the river. (This is a reversal of the position held by his predecessor, Paulo Muchanga, who laid greater stress on Cahora Bassa North).

“The strategic priority is Mpanda Nkua”, insisted Couto. “Cahora Bassa North can wait for a better opportunity”.

But he added that HCB will not press ahead with involvement in Mpanda Nkua without a fresh set of economic, environmental, financial and legal studies. A rigourous economic approach is needed, said Couto, “since a project like this is not built on the basis of grants or subsidies”.

HCB is also interested in branching out into renewable energies (such as solar, wind or geothermal power), but insists that all new projects must rest on a basis of technical, economic and financial viability, and must bring business advantages to HCB.

The company is implementing a new strategic plan for 2018-2022, aiming primarily at modernising the electricity generation system, which is 40 years old. New investment is needed, if HCB is to continue the contracts with its clients.

The Strategic Plan hinges on capital expenditure of 500 million euros (585 million US dollars) over the next ten years. The greater part of this (318 million euros) will be spent on upgrading the sub-station at the dam town of Songo.

Source: AIM