VZCZCXRO9774
RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMA RUEHMR RUEHPA RUEHRN RUEHTRO
DE RUEHTO #1018/01 3050922
ZNR UUUUU ZZH
R 310922Z OCT 08
FM AMEMBASSY MAPUTO
TO RUEHC/SECSTATE WASHDC 9484
INFO RUEHZO/AFRICAN UNION COLLECTIVE
RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHBJ/AMEMBASSY BEIJING 0230
RUEHBR/AMEMBASSY BRASILIA 0138
RUEHBY/AMEMBASSY CANBERRA 0129
RUEHLO/AMEMBASSY LONDON 0270
RUEHMO/AMEMBASSY MOSCOW 0060
RUEHOT/AMEMBASSY OTTAWA 0452
RUEHFR/AMEMBASSY PARIS 0156
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEHNSC/NSC WASHDC
RUEAIIA/CIA WASHDC
UNCLAS SECTION 01 OF 03 MAPUTO 001018
SENSITIVE
SIPDIS
STATE PLEASE PASS USAID
STATE PLEASE PASS USGS
STATE PLEASE PASS DOE FOR SPERL AND PERSON
DEPT FOR AF/S, AF/EPS, AND EEB/ESC AND CBA
E.O. 12958: N/A
TAGS: ENRG EPET EMIN EINV ETRD SENV MZ SF
SUBJECT: CAHORA BASSA HYDRO DAM ENERGIZES SOUTHERN AFRICA
REF: A. GABORONE 818
B. MAPUTO 972
1. (U) This cable represents the first in a series in an
innovative collaboration in energy/resource reporting and
commercial advocacy between Embassies Maputo and Pretoria.
Embassy Pretoria Minerals/Energy Officer and Maputo
Political/Economic officer visited energy/minerals projects
in northern Tete Province and met relevant government and
private officials in Maputo October 13-17, 2008.
2. (SBU) SUMMARY: The 2075 MW Cahora Bassa Hydroelectric
(HCB) dam is the flagship power exporter for southern Africa,
providing significant power to South Africa, Mozambique,
Zimbabwe and Botswana. The dam is emblematic of Mozambique's
capacity to increase its power exporter status to mitigate
the regional power shortfall by development of a potential
combination of expanding HCB and building new hydroelectric
and coal- and gas-fired facilities (septel). Realizing these
projects will require an extraordinary level of cooperation
between South Africa, its state power utility Eskom,
different institutions within Mozambique, and potential
financiers. Cahora Bassa was able to increase its exports to
South Africa and the region to help alleviate the power
shortfall earlier this year. Some reduction in power
dedicated to the Mozal Aluminum Smelter in Maputo has
remained a controversial issue. The Embassy team visited
Cahora Bassa on October 14. END SUMMARY.
------------------------------------
Damming the Zambezi -
And Mozambique's Second Independence
------------------------------------
3. (SBU) Cahora Bassa is a mega-project which dams the
Zambezi River in northern Mozambique. The 164 meter height
dam produces a 270 kilometer reservoir and an average water
flow of 10,000 meter cubed per second. Five 415 MW
generator-turbine-rotor units have a theoretical capacity of
2,075 MW. The project delivers power to South Africa and
southern Mozambique by way of a high voltage direct current
(HVDC) bipolar line running 1,420 kilometers to the Apollo
converter sub-station in South Africa and via 220 kilovolt
alternating current (AC) lines to northern Mozambique,
Zimbabwe, and Botswana. The Portuguese government (GOP)
constructed the dam between 1969 and 1975, and maintained
majority control of operations until November 2007. Full
commercialization of the dam was delayed by the civil war in
Mozambique when the main transmission line was damaged. The
dam and power station were maintained, but unable to send
power anywhere. The modern version of the facility was
premised on Eskom providing 900 MW of its 1200-1300 MW
allocation to the Mozal Aluminum Smelter in Maputo via
separate company Motraco. Since November 2007, the dam is
operated by Hidroelectrica de Cahora Bassa (HCB), which is 85
percent owned by the GRM and the GOP 15 percent. Just over
70 percent of the GRM's share was financed by the Portuguese
bank BPI and the French investment bank Calyon. During the
handover ceremony that reduced the GOP share and increased
GRM control, President Armando Guebueza characterized the
moment as Mozambique's "second independence." Canadian firm
Manitoba Hydropower has an embedded engineer who monitors the
day-to-day maintenance and operations of HCB on behalf of the
consortium.
4. (SBU) HCB CEP Paulo Muxanga greeted the embassy team and
stressed that his primary mission was to maintain the power
facility and produce as close to capacity as possible, given
growing demand in the region. Two of his senior managers
accompanied the team to the dam, immense underground
generator room, and sub-station (where separate lines feed
Zimbabwe, northern Mozambique, and South Africa, the latter
by rectifier/converter to HVDC). On this particular day, two
of the generator units were under scheduled maintenance,
simultaneous with servicing of the Apollo sub-station in
MAPUTO 00001018 002 OF 003
South Africa. Muxanga noted that HCB was able to respond to
the Eskom power crisis, ramping up an incremental 250 MW
based on using the plant's fifth generator. He noted that
this was intended to assure adequate power to Mozal and
Botswana, but he complained that Mozal was initially
subjected to the general ten percent industry reduction
imposed by Eskom. The reduction was subsequently reduced to
the current four percent, but the GOM is still seeking to
regain the full allocation for Mozal.
----------------------
Sending Power to Eskom
----------------------
5. (SBU) HCB and Electricidade de Mocambique (EDM) officials
pointed out the following break-down of power deliveries:
- - 1200-1600 MW to Eskom, including amounts going back to
Mozal and EDM for southern Mozambique via HVDC
- - 60-100 MW directly to EDM for northern Mozambique
- - 100-200 MW to Zimbabwe
- - 50-70 MW to Botswana
1600 MW is considered "firm" commitments of HCB and the
balance is marketed to the short-term electricity market
(STEM) and priced on a short-term basis to Eskom, Botswana
Power Corporation, Zimbabwe Electricity SA, and Namibia.
Zambia has requested up to 100MW more and Botswana has also
requested additional power as it is forced to be weaned off
of Eskom (Ref A). EDM officials said Zimbabwe also
occasionally takes up to 250MW of "firm8 firm power on a
"non-firm8 rolling contractual basis, and that Zimbabwe pays
for electricity, but always with hassle and delay, given that
HCB has a dedicated line to Zimbabwe which can also service
Botswana and Namibia. EDM touted that HCB is the only active
player in the SADC region STEM market, even though HCB has
limited unclaimed capacity. (Note: The Southern African
Power Pool assures modest interconnectivity, but has been
unable to set up trading, for lack of excess power. End
Note.)
-----------------------
Potential for Expansion
-----------------------
6. (SBU) HCB's Muxango was bullish on the possibility of
expansion of the Cahora Bassa facility to the north bank of
the Zambezi (all the existing generating capacity is on the
south bank), which could generate 900-1300 MW, utilizing the
dam and other existing facilities at the company town of
Songo. He said such a project would reach completion in
about 5 years, costing roughly $870 million, and financing
would be an issue. Muxango noted that the company was
investing in road works around Songo to spruce up the image
of Mozambique's second strongest company and brand HCB, after
Mozal. He hoped that the GOM would eventually be able to
move on green field hydroelectric and the north-south
backbone transmission to feed power growth and independence
in Mozambique (septel).
7. (SBU) The narrow Cahora Bassa reservoir extends 270
kilometers to the Zambia border. In Africa, only Egypt's
Aswan dam is bigger in terms of surface water. The
Embassies, team was duly impressed with the scale and power
of Cahora Bassa, even being able to descend into one of the
operating units and to be awed at the proximity of the
power-generating water flow. Unlike the upstream Karibe Dam
and Victoria Falls, remote Cahora Bassa is relatively
undeveloped for fishing and tourism. Tete Province is dusty,
dry, and hot and notable for majestic Baobab trees.
--------------------------------------------- -
COMMENT: HYDROPOWER, MOZAMBIQUE'S NICHE MARKET
--------------------------------------------- -
8. (SBU) Mozambique's largely undeveloped hydro potential
and its proximity to power-hungry neighbors in the SADC
MAPUTO 00001018 003 OF 003
region mean that developing hydropower generation may be a
key development strategy for Mozambique. Building additional
power generation and export capacity could contribute
significantly to regional growth and stability while
enhancing Mozambique's economic development, thereby
complementing U.S. strategic interests for the region. TDA
should strongly consider assisting with feasibility studies
and technical support, particularly for the Cahora Bassa
North Bank project, which appears to be the most feasible
next step in generation capacity enhancement. Realizing
future hydro mega-projects will demand extraordinary
implementation skills in bringing all stake-holders together,
while the challenges include gaining a bankable power
purchase agreement from Eskom, and ensuring sufficient
transmission capacity. Domestically, Mozal Aluminum Smelter,
Mozambique's leading export company, hopes for additional
power to expand its facilities. Looking to the future,
domestic manufacturing, tourism, and agriculture sectors
could see accelerated growth if inexpensive power is
guaranteed by increased generation capacity. South Africa
has found that cheap power to drive energy-intensive projects
may be a thing of the past, but Mozambique may still be able
to leverage its abundant hydropower potential.
Chapman