(2015-06-12) Hidroelectrica de Cahora Bassa (HCB), the company that operates the Cahora Bassa dam on the Zambezi River, in the western Mozambican province of Tete, expects to start construction of a second power station in the near future, the HCB chairperson, Paulo Muxanga, announced on Thursday.
When built, the north bank power station could add 1,045 megawatts to the dam’s generating capacity. The existing, south bank, power station can generate a maximum of 2,075 megawatts.
Speaking at a seminar on the contribution of HCB to Mozambique’s national development, Muxanga noted the increasing shortage of electricity, both in Mozambique, and in the southern African region.
“The energy scenario of 40 years ago, when Mozambique’s entire energy consumption scarcely reached 100 megawatts, can in no way be compared with today’s situation”, he said. “Electricity consumption in the cities and in the countryside has risen exponentially, and nowadays we frequently hear news of industries that cannot be established in certain parts of the country because of a lack of electricity”.
Muxanga thought that major electricity generation projects, such as the north bank power station, can go ahead based solely on Mozambican demand for electricity “although that does not mean abandoning Mozambique’s natural vocation of supplying energy to the region”.
In other words, building a second Cahora Bassa power station does not depend on a firm commitment from the South African electricity company, Eskom, to buy the power produced.
Muxanga was certain that HCB is sufficiently robust financially to obtain loans from financial institutions with no great difficulty. Indeed since 2010 “we have received about ten proposals to finance the north bank power station”, he said. “The most recent was last week. They are offering us the money to build the new power station”.
Muxanga said that HCB had told the government it would probably take six years to install the north bank station. The government’s response was to ask whether this time could be cut to five, or even four years. “So we are ready to go”, he declared.
One of the reasons why HCB is credible in financial circles is that it is paying off its debts, not just on schedule, but in advance.
In 2007, HCB passed into majority Mozambican ownership. Previously the Portuguese state had owned 82 per cent of the company, and Mozambique just 18 per cent. A deal was struck between the two governments, whereby the Mozambican government agreed to pay Portugal 700 million US dollars for 67 per cent of its shares in HCB, thus giving Mozambique an 85 per cent stake. (The separate question of HCB’s debt to the Portuguese treasury was solved with a payment of 250 million dollars from HCB’s own coffers).
The 700 million dollars was raised as a loan from a consortium of French and Portuguese banks. The loan was to be repaid out of HCB’s profits.
Under the original schedule, by now around 51 per cent of the loan should have been repaid. In fact, HCB has already repaid 72.9 per cent, and is a full year in advance with its payments. It had expected to repay the loan in full by December 2017, but the company believes that it will be able to make the last payment by December 2016.
Summarising the company’s financial situation, Manuel Gameiro, of the HCB Executive Commission said that HCB’s net result for 2014 was a profit of around 77 million dollars. The operational results for the year were up by 67.7 per cent, when compared with 2013.
When it was under Portuguese control, HCB was exempt from tax, but now it is making a major contribution to the Mozambican treasury. When taken together, the corporation tax, value added tax, concession tax and dividends paid to the state as the main shareholder amount to around 80 million dollars a year, Gameiro said.
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