Electricidade de Moçambique (EDM) is considering adopting a seasonal tariff for the manufacturing industry, a mechanism that could reduce the cost of energy, stimulate the production sector and boost industrialisation in the country.
The possibility of adopting seasonal tariffs was admitted this week by the chairman of the EDM board of directors, Marcelino Gildo, speaking to “Notícias” on the sidelines of the economic seminar on industrialisation.
The statement by EDM’s board of directors comes at a time when the Confederation of Economic Associations of Mozambique (CTA) has reportedly presented a proposal to change the tariff structure.
EDM considers that CTA’s proposal has merit to pass, so the Mozambican electricity company is carrying out a tariff study, which will give a new methodology.
“We are aware of the concerns of the industry sector and it seems to make sense the suggestion presented by CTA for the introduction of the seasonal tariff. In fact there are periods when we have a lot of energy availability that could be used by the industry in the production process. Therefore, the proposal has conditions to advance, but we have to make some studies on this”, said Marcelino Gildo.
In his turn, the president of CTA, Agostinho Vuma, believes that, with the adoption of this measure, it is estimated that the sector’s production cost may reduce by about 46.5 percent.
According to Agostinho Vuma, a 2019 study conducted by his organisation suggested that the main factors affecting the competitiveness of the Mozambican manufacturing industry were the costs of raw materials, capital and energy.
Two more factors were added to these, namely market access and the availability of the skilled workforce for the specific needs of manufacturing.
According to the source, this result suggests that measures to boost the Mozambican manufacturing sector should take these variables into account, as they are the ones that most affect the area’s competitiveness.
To induce a reduction in the cost of capital and improved access to finance, CTA proposes the adoption of alternative avenues, namely the development of the capital market and the materialisation of financing projects.
“Our industry needs a development-oriented funding line to become competitive, for example, compared to South Africa, our main competitor for finished products, where a company has a competitive advantage estimated at around 38.01 percent compared to a Mozambican company,” he said.
