MAPUTO– Hidroelectrica de Cahora Bassa (HCB), the company which operates Mozambique’s Cahora Bassa hydro-electric dam on the Zambezi River, made a profit of 7.2 billion meticais (about 118 million US dollars) in 2017, even though the dam could not operate at full capacity because of the low levels of water in the reservoir.

Addressing the company’s annual meeting here Tuesday on HCB’s performance, Moises Machava, the company’s technical director, explained that would he described as a cyclical drought in 2016 has reduced the amount of water held in the reservoir to 41.8 per cent of the optimum amount.

In December 2016, the elevation of the water level at the reservoir had fallen to 312.22 metres above sea level, the lowest recorded since the construction of the dam. There was a significant recovery in 2017, and by the end of the year the elevation had reached 317.69 metres, but still way below the elevation of 326 metres regarded as necessary for normal operation.

The HCB management judged the elevation as not sufficient to keep the dam operating at full capacity, and took one of the five giant turbines, each capable of generating 415 megawatts (MW) of electricity out of service.

HCB hopes that the recovery in the level of the Zambezi River will continue throughout 2018, and that by the end of the year the elevation will reach 320.12 metres. The company intends to operate only four turbines throughout the year.

HCB generated 13,778 gigawatt-hours (gWh) of electricity in 2017, more than the initial target of 12,906 gWh, but less than the amount generated in the previous four years, which reached a peak of 16,978 gWh in 2015.

When the inevitable losses in transmission are taken into account, the amount of power received by HCB’s clients was 12,491 gWh. The South African electricity company, Eskom, remains by far the largest customer, taking almost 71 per cent of the power sold by HCB. Mozambique’s publicly owned distribution company, EDM, takes 24.5 per cent, and the Zimbabwean power utility, ZESA, 4.7 per cent.

Negotiations between HCB and Eskom took place in late 2017, resulting in a 46 per cent increase in the tariff paid by Eskom. These negotiations take place every five years but the unit price paid by Eskom remains unknown to the public, since it is covered by a confidentiality clause in the contract between HCB and Eskom.

The company’s financial director, Manuel Gameiro, said revenue in the first half of this year was 39 per cent higher than in the first six months of 2017. Operational profits have risen by 54 per cent.

The company is continuing to generate very positive results and shows the solid resilience of its business model, he stressed.

HCB is also meeting to the full its fiscal obligations to the Mozambican state, Gameiro said. Taxes, fees and dividends paid to the State in 2017 came to the equivalent of about 130 million US dollars.

Currently HCB has two shareholders — the Mozambican state (owning 92.5 per cent of the shares), which earned a dividend of 18 million USD, and the Portuguese company REN (holding the remaining 7.5 per cent), which was paid a dividend of 1.6 million USD.