Mozambican companies’ electricity costs have increased by more than 100 percent over the last three years, damaging the business environment in the country, according to a study on “The impact of electricity tariff increases in the business environment”.
The Economic Associations Confederation (CTA) study indicates that in November 2015 energy tariffs increased by 7 percent, while in November 2017 they increased by 10 percent.
“Since 2015, we have been witnessing rampant increases in electricity tariffs, which, in general, are not accompanied by improved reliability,” the analysis points out. These increases, the text argues, have significantly increased costs for businesses.
To cope with the low quality of energy, many companies are forced to acquire alternative means such as generators and transformation stations. “Such alternative methods entail additional costs for the private sector, and these investments could have been used to improve production processes and boost the profitability and competitiveness of our companies,” the CTA notes.
Overall, there is dissatisfaction with the electricity supply because, despite the increase in tariffs, nothing has changed in terms of the quality of the power supplied.
“The main conclusion of this study is the need to improve the quality of electricity supply,” the analysis reads.
The CTA advocates additional energy reforms to streamline the business environment and attract investment in industries.
“Another way to improve the quality of electric power would be to liberalise small sources of power generation to supply directly to industry,” the study points out.
The study’s authors believe that it is crucial to revise the electricity law and quickly draft regulation to create an Energy Supervisory Authority, steps which would allow for greater transparency among energy sector operators as well as greater involvement of the private sector in electricity distribution and marketing.
Competition could help ensure quality, reliability and transparency in pricing, the report concludes.