Hidroeleictrica Africa Energy Dec13 Bro

HidroelĂŠctrica de Cahora Bassa A symbol of national pride

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Hidroeléctrica de Cahora Bassa

A symbol of ational pride The Cahora Bassa dam is more than Mozambique’s defining engineering achievement: its development

by Hidroeléctrica de Cahora Bassa (HCB) is the keystone of southern Africa’s quest for sustainable and reliable power

written by: john o’hanlon research by: candice nice

Hidroeléctrica de Cahora Bassa

T

he Cahora Bassa dam was completed in 1974 just as Portuguese control of Mozambique was coming to an end. It was conceived as a colonial project, Portugal’s infrastructural master work, that was designed to ‘foster human promotion through an improved standard of living for thousands of Africans who live and work there’ and that the power station would also boost economic revenue for Mozambique as it would sell cheap electric energy to South Africa and other neighbouring countries. However in the years of internal conflict that followed independence in 1975 the dam’s transmission lines were regularly sabotaged, to the extent that 1,895 towers needed to be replaced and 2,311 refurbished over a distance of 893 kilometres on the Mozambican side of the line. This made HCB’s task of generating, transmitting and selling clean electricity a difficult one.

A protocol signed in 1975 between Mozambique’s ruling party Frelimo and the Portuguese government provided for the project’s eventual transfer to full Mozambican ownership once the investment made for its construction was paid back. Decades of wrangling between Mozambique and its former colonial ruler over who should pay for damage to the dam in the war of independence and the subsequent civil war created an atmosphere of tension that was finally laid to rest six years ago with the transfer of all but a 15 percent holding.

The reversion of majority control to the government, for a consideration of more than $900 million, was celebrated as a

Hidroeléctrica de Cahora Bassa moment of immense national INTELLICA pride; so much so that it INTELLICA is a consulting firm guided by professionalism, has been regarded by some thoroughness and integrity with the sole purpose of as a ‘second independence’ helping its customers achieve operational excellence and for the country and market competitiveness. heralded a final break with INTELLICA bets on solid and lasting relationships with its its authoritarian colonial customers, putting their interests first, valuing teamwork through continuous interaction. Since 2009 INTELLICA has past, with Mozambique’s maintained a solid relationship with HCB. President A r mando We wish to highlight the support we have been providing Guebuza declaring: “Cahora for HCB throughout various initiatives and projects to Bassa is ours!” improve their management processes, with special focus on In 2012 the sense of the design and implementation of HCB’s Human Resource urgency in Portugal to resolve Integrated Strategic Management System. the issue increased sharply HCB has been an example of operational and management excellence and a regional and international reference in as its economy came under promoting socio-economic and environmental development pressure from international by producing clean energy. We wish to remain the first choice lenders to privatise state for HCB when it comes to strategy consulting, management, assets at a time when Portugal human resources and corporate finance segment. itself is in deep recession.

Jorge Mondlane, Intellica Managing Partner In November last year the www.intellica.co.mz Maputo administration and the government of Portugal signed an agreement that handed over a further 7.5 percent of the shares, giving Mozambique 92.5 percent ownership, with just a final 7.5 percent remaining in the hands of the Portuguese power company REN. Over the next two years, REN will

“There is no development without electric energy”

HidroelĂŠctrica de Cahora Bassa relinquish its holding in HCB, in exchange for shares in a company that will operate a new electricity transmission line, the CentreSouth (CESUL) project from Tete province to Maputo which is needed because the existing line, from Songa to South Africa, cannot carry any more power. The estimated cost of CESUL is about $1.8 billion.

This means that from only 18 percent national ownership ten years ago Mozambique has finally realised its ambition to take over the dam completely from Portugal, allowing HCB to sell more power to other African nations.

Currently Mozambique sells electricity to neighbouring SADC countries South Africa, Zimbabwe and Swaziland.

Botswana, Malawi, Tanzania and the DRC have also expressed their desire to purchase power from Mozambique.

Mozambique is growing at a very fast pace. So are the other countries mentioned, and South Africa will always be able to make use of this source of clean power on its northern border, within easy reach of its industrial base in the provinces of Gauteng and Limpopo. Power is transmitted to South Africa via a 1,420-kilometre high

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voltage direct current (HVDC) line from the Songa substation at Cahora Bassa to the Apollo converter station near Johannesburg.

Around 20 percent of HCB’s production capacity is directed towards Mozambique, which might seem a small proportion but represents a substantial increase when it is considered that as recently 2007 only 13 of output was consumed locally. Much of this increase is accounted for by the major coal and other mineral exploitation projects in Tete province, where the dam itself is located, such as Vale’s deposit in the Moatize Basin, and Rio Tinto’s Benga coal mine.

As downstream industries develop in the port cities of Maputo and Beira and elsewhere, and the economy grows thanks partly to associated infrastructure development, demand for power is expected to increase rapidly. “There is no development without electric energy,” HCB’s CEO Paulo Muxanga says. “Because we are aware of this, we are always expanding our electrical power production capacity.”

Muxanga, a former transport minister, replaced his Portuguese predecessor in December 2007 becoming the first Mozambican to occupy the position of chairman of the board of the Cahora Bassa It was under his leadership that HCB went through a period of unparalleled growth that culminated with reporting its

first profit in 2010. The following year saw a growth in profitability of more than 262 percent, to $130 million.

On the production side, HCB maintains an enviable level of 99 percent reliability.

Nevertheless to a greater or lesser extent Mozambique itself, South Africa, and all the other countries in the SACD region struggle with intermittent supply, causing problems

“As downstream industries develop demand for power is expected to increase rapidly”

Hidroeléctrica de Cahora Bassa

and added cost for industry of every kind.

This is largely due to transmission issues, which HCB is determined to address. The new $800 million power transmission line project linking the central and northern regions of the country, the so called CentralNorth project, should be operational by the middle of 2015.

The dam’s existing power station on the south bank of the river contains five turbines, each with the capacity to generate 415 megawatts, giving the company a total notional generating capacity of around 2,075 MW. By far the most transformational project in preparation is a completely new power plant on the northern bank of the Zambezi River which, with a planned capacity of 1,245

MW, will effectively double output over the coming five years. More power stations are planned for Tete, including a new dam at Mepanda Nkua, 60 kilometres downstream from Cahora Bassa. Between them, Mepanda Nkua and the Cahora Bassa North Bank power station will produce as much again as HCB’s entire current generating capacity.

That will again throw the burden for getting that power to market onto the distribution networks, both within Mozambique and beyond its frontiers.

For more information about Hidroeléctrica de Cahora Bassa visit: www.hcb.co.mz

HidroelĂŠctrica de Cahora Bassa www.hcb.co.mz

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