3 December 2008
Maputo — The Mozambican government on Wednesday claimed that the local initiative investment budget (OIIL) channeled directly to the rural districts has been succeeding in its aim of increasing food production and generating employment.
Speaking in the country's parliament, the Assembly of the Republic, the Minister of Planning and Development, Aiuba Cuereneia, said that although, when first announced in 2006, this fund was a blanket seven million meticais (about 290,000 US dollars) for each of the 128 districts, it has now increased to eight to ten million meticais per district, plus a further component for locally funded infrastructure. This brings the maximum a district might receive to 13 million meticais a year.
Cuereneia said that this year the OIIL has funded 2,462 projects to produce food, and around 3,600 for other purposes, In total, these projects have created 20,000 permanent or seasonal jobs.
But he admitted there had been "a low rate of return" on this fund. The money is provided as loans, but so far few of the beneficiaries have returned the money. Cuereneia did not give figures, in either absolute or percentage terms, for how much money has been repaid, and how much is still owing.
Answering a question on rural electrification, Energy Minister Salvador Namburete said that all 128 district capitals have electricity from one source or another, and 78 of them are now connected to the national grid based on the Cahora Bassa dam. 27 of these districts have been connected to the grid during the life of this government, from 2005 to the present.
Since 2005 the number of consumers of electricity, mostly households, has risen by 300,000. The pace picked up in the last two years, with 95,000 new consumers added in 2007, and over 100,000 in 2008. The number of Mozambicans with electricity in their homes has risen from a mere seven per cent of the population in 2004 to over 13 per cent now.
85 million US dollars had been invested in transmission lines and sub-stations since 2005, said Namburete. A further six million dollars had been spent on studies for a new transmission line that will run from Tete province to Maputo. This line is needed to carry the large amounts of energy that will be generated by new projects on the drawing board in the Zambezi valley, such as a new dam on the Zambezi at Mepanda Nkua, a second power station at Cahora Bassa, and two coal fired power stations.
Namburete said that the transfer of majority ownership of the Cahora Bassa operating company, HCB, from Portugal to Mozambique last year had been crucial in making more power available for Mozambique's own requirements. HCB had agreed to sell an extra 100 megawatts to the Mozambican state electricity company, EDM. This brings EDM's take from Cahora Bassa from 300 to 400 megawatts, making the accelerated electrification of the districts possible.
Prior to 2007, when HCB had been controlled by the Portuguese government, it has been extremely difficult to persuade it to release additional power for Mozambique's own needs, Namburete recalled.
Deputies from the opposition Renamo-Electoral Union coalition asked why Mozambican fuel prices remained high after the price of crude oil had collapsed by almost two thirds from its high point in July.
Namburete argued that, in fact, the Mozambican government had taken extraordinary measures to protect Mozambican consumers from the full impact of this year's huge rises in world oil prices. It had managed to freeze the price of diesel at 35.35 meticais (about 1.5 US dollars) a litre between January and October - this was achieved by temporarily removing customs duties and Value Added Tax (VAT) on diesel, and halving the fees charged by the ports and rail company, CFM, for handling diesel.
Had the government not taken those measures, Namburete said, the price of diesel would have gone to over 50 meticais a litre, with very serious effects of Mozambican economic life.
Oil prices had indeed fallen sharply - but Namburete reminded deputies that, since Mozambique has no oil refinery, it must import refined fuels, which is always more expensive. Nonetheless the government had cut fuel prices in October, and again in November.
Diesel now costs 31 meticais a litre, and petrol 37.36 meticais a litre, after reductions of seven and 10.2 per cent respectively in November.
Namburete said the government was able to resume charging customs duties on diesel, and to restore CFM's fees to their normal level. But the government did not regard the fall in the price of imported fuels as sufficient to allow the normal fiscal regime to be fully restored, and so for the time being diesel remains exempt from VAT.
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