Mozambique Electricity

The Mozambican electricity company, EDM, has put up its tariffs as from 1 November.EDM made no announcement of the increased electricity prices in advance, and the first the public knew of it was an interview given by EDM commercial director, Sergio Parruque, to the independent television station STV on Thursday.Parruque said that domestic consumers (who account for 92 per cent of EDM’s clients) will pay an extra 54 centavos (about 1.3 US cents) per kilowatt/hour (kwh). The general tariff (for trade, offices, public institutions and companies) rises by 1.7 meticais (about four US cents) per kwh.For medium voltage industrial clients the rise is 69 centavos per kwh, and for medium voltage agricultural clients it is 30 centavos per kwh. The tariff for low voltage agricultural electricity users, and the social tariff for low income households who consume less than 100 kilowatt/hours a month remain unchanged.Parruque did not give the percentage price rise. But this AIM reporter, by looking at his own prepaid electricity bill from last month, calculates that the domestic tariff has risen by 18.7 per cent.

EDM’s prices had been frozen for five years. The last price rise, of 13.4 per cent, was in 2010 – it coincided with increases in the prices of several other goods and services, notably bread, and this wave of price rises led to serious rioting in Maputo on 1-2 September 2010. The government then cancelled part of the electricity price rise. It scrapped the increase in the “social tariff” for consumers who use less than 100 kilowatt-hours a month. For those who use between 100 and 300 kilowatt-hours a month, the price increase was reduced from 13.4 to seven per cent. Only richer consumers, who use over 300 kilowatt-hours a month, paid the full increase. Parruque said that for years EDM has been seeking authorization from the government to increase its tariffs, without success. Studies by EDM indicated that there should have been price rises in 2011 and 2012.“Various reasons made the tariff adjustment impossible”, he said. “It’s the government that should authorize any increase, but it also made its own analysis of the macro-economic implications of increasing the electricity price”.EDM fell into debt – including with its main supplier of electricity, HCB, which operates the Cahora Bassa dam on the Zambezi, the source of most of the power that EDM distributes. The debts were “suffocating” EDM, Parruque said.The price rise, he continued, “will improve the company’s treasury situation, but it will not make possible the large investments needed to ensure improvements in the quality of the electricity supply, which is our main focus at the moment”.Even with the price hike, the EDM tariffs, he said, were low and well below market prices. In future, EDM would have to make regular price increases, he said.“We understand it can’t be done all at once”, Parruque added, “because the adjustment is large, and would have a very great impact on the pockets of the final consumers. The project is to make the increases gradually, so that the company can make investments”.