ELECTRICITY PRICES RISE

Mozambique’s publicly-owned electricity company, EDM, increased its prices, as of Tuesday, by between 27 and 40 per cent.The price per kilowatt-hour rises from 4.16 to 5.8 meticais (from 5.4 to 7.6 US cents, at current exchange rates) for consumers on the low voltage general tariff (for industries, trade, offices, shops and similar establishments) who use up to 300 kilowatt-hours a month. This is an increase of 39 per cent.

Use of more than 300 kilowatt-hours pushes the price up steeply. Between 301 and 500 kilowatt-hours the price rises from 5.94 to 8.29 meticais per kilowatt-hour. Above 500 kilowatt-hours a month, the increase is from 6.5 to 9.07 meticais per kilowatt hour.The preferential household tariff is considerably lower. For the first 300 kilowatt-hours, the price rises from 2.95 to 4.04 meticais per kilowatt hour, and between 301 and 500 kilowatt-hours a month from 4.17 to 5.72 meticais per kilowatt-hour. Consumption in excess of 500 kilowatt-hours now costs six meticais rather than 4.38 meticais per kilowatt hour. This increase is 37 per cent.Farmers enjoy a lower tariff. This agricultural tariff rises by only 27 per cent, from 2.68 to 3.4 meticais per kilowatt hour for the first 300 kilowatt-hours, and rising to 5.3 meticais per kilowatt hour for consumption in excess of 500 kilowatt-hours.

In addition, all these consumers pay an additional fixed rate, irrespective of consumption, which has risen from 108.82 to 152.37 meticais a month (a 40 per cent rise).

Consumers who use EDM’s pay as you go electricity meters (known as Credelec) face the same percentage rises. Thus a household using Credelec will now pay 5.14 rather than 3.75 meticais per kilowatt-hour, while the general pre-paid tariff rises from 5.96 to 9.07 meticais per kilowatt-hour. But the pre-paid price is the same regardless of consumption and there is no fixed rate charge.

The “social tariff” for low income domestic consumers who use less than 100 kilowatt-hours a month remains unchanged, at 1.07 meticais per kilowatt-hour.

Speaking to reporters on Monday, the chairperson of the EDM board, Mateus Magala, confirmed that the company’s tariffs were about to rise. He said this was essential “in order to mobilize resources to ensure universal access to electricity by 2030”. Magala said that, with a general tariff equivalent to 5.3 US cents per kilowatt hour, Mozambican electricity was the cheapest in the region. In other members of SADC (Southern African Development Community), electricity cost 12.5 US cents per kilowatt-hour, which made further investment possible, and this greater access to electricity.He warned that further price increases are likely so that Mozambican electricity prices can converge with those of the rest of the region by 2019. Magala insisted that electricity for the poorest strata of society would continue to be subsidized.Interviewed in Tuesday’s issue of the independent daily “O Pais”, EDM spokesperson Luis Amado, pointed out that EDM is still selling its power below cost. The company, he said, pays between nine and ten US cents for each kilowatt-hour, but was then selling the power on to its clients for not much more than half this amount. Even with the current rise in the general tariff to 7.6 US cents per kilowatt-hour “we are still below the desired level”.

“But we can’t make substantial increases all at once”, Amado said. “It has to be gradual and we are trying to reach a tariff that reflects the costs”.

He added that currently EDM only covers 27 per cent of the Mozambican population. The challenge facing the company was to reach 100 per cent. “We are still a long way from that”, said Amado, “and for this to happen EDM must have the capacity to invest”.

EDM is facing the consequences of the electricity price freeze that was in force from 2010 to 2015. The previous government, under President Armando Guebuza, was faced with riots over price rises in September 2010, and reacted with a variety of subsidies and price freezes on essential goods and services. For five years EDM was unable to put up its prices, despite its board repeatedly warning the government that the situation was unsustainable and that tariffs must rise.