How EDM came into being
EDM as a State-Owned Company was set up in 1977, two year following the Independence of Mozambique. The objective was to establish and operate public service in Generation, Transmission and Distribution of electricity.
One of its first tasks was to merge all generation centres into one single body in order to fully meet all electricity requirements for the development of agriculture, industry and household consumption in the long gone hard days.
EDM inherited an asset made up of multi-sourced equipment, various models and types in bad shape of repair, and save rare exceptions, with no stock for the required spare parts, coupled with limited competencies and professional capacity. Thus, the few existing qualified professionals started leaving the Company.
How the Company managed to move away from this situation
In light of this, EDM immediate attention turned to:
- Restocking the required supplies;
- Sourcing and recruitment of qualified technical staff both in-house and externally; promoting an increasing number of training opportunities with external support; conducting pre-service activities in different plants, under coordination of EDM Training Department; mobilization of external support with a view to obtaining technical and financial assistance. Concurrently, and taking in to consideration inflation for the costs of liquid fuel, EDM started seeking other opportunities for generating electricity based on existing hydro resources in Mozambique.
- In this view, a number of projects were set up towards reducing the use of diesel and the establishment of a National Electricity Transmission Network that would allow for optimization of hydro potential. The implementation of these intentions was severely curtailed by the unfavourable social and political situation at the time.
Moving back and forth
Social, political and economic instability would not allow the implementation of roll out-projects of the national grid. EDM equipment was exposed to destruction resulting from armed conflict and the Company turned its attention to allocating the scarce resources to repair and replacement of infra-structures in order to ensure the supply of electricity at all cost, though with low reliability.
In this period, which elapsed for twelve years, the Company was granted a collective award in recognition for its achievements and efforts of its employees to keep the systems running.
At the time, the Government proceeded with its fiscal policy, among other public services, to supply electricity to all the people at a very low cost. This practice remained for years, whereby the generation and distribution of electricity was carried out at a cost that was never recovered at the final price to the consumer. As part and parcel of the consequences of the combination of various adverse factors, the quality of electricity supplied dropped. The principle of corporate management based on profit was discarded in favour of centralized price setting.
The tariff policy would not mirror the investment costs, let alone the operational costs of the Company, while these, in some cases were covered to some extent by the Government Budget, donors and external financiers.
New corporate management
Within the Economic Re-structuring in Mozambique, in 1995, EDM was transformed into a Public Company by Decree 28/95 of 17 July, inheriting a debt burden associated with hard-return on capital investments carried out and still underway.
The "new EDM" (EDM-E.P.), now moved to guiding and conducting its activities with a view to improving the quality of service delivered to the customer with efficient use of electricity, hence promoting its image.
EDM-E.P. structure is organized around four command principles whereby there is functional responsibility and direct control of Board members and their Portfolios. This structure aims to ensure autonomy and operational decentralization required for a dynamic operation that would also allow running cost reduction for Board members so that they are busied with strategic core business of the Company.
With the change of the Company management model, reshuffling was initiated taking into consideration the main issues, concerns and bottlenecks at the time, prospects and challenges, as well as guidelines set for electricity industry within the five-year Government plan.
Attention shifted to renovation of damaged facilities during the war, improving quality service delivered and economic and financial enhancement.
In this endeavour, among others, the following strategic objectives should be highlighted:
- Improve quality of service delivered to customers;
- Expansion of domestic and regional electrical grid;
- EDM capacity building, especially with regard to establishing a productive and motivated workforce;
- Participation in the exploitation of the hydro potential of Mozambique.
To meet these objectives, the following cornerstones were set to make the Company viable and modern:
Institutional re-structuring of the company, based on promoting competence, improved management and performance;
- The setting up of Regional Operational Units to make all areas, duties and responsibilities more transparent, hence according more autonomy in decision making;
- The establishment of Commercial Departments and the expansion of the invoicing system in all Operational Units;
- Measures to be taken to make EDM a more competitive company and reduce losses of electricity over the system of generation, transmission, invoicing and collection.
Concurrently, EDM prepared for another expansion and consolidation phase, resulting from, on the one hand, economic growth of Mozambique and on the other, the approval of Electricity Law which opened the door for competitiveness in the national electricity industry.
The improved performance of Company called on the concentration of its activities on its social object, whilst activities that are not encompassed in this area were conducted in partnership with third parties or transferred through management contracts.
