6 September 2012

Mozambique: TPM Debt Bears Heavily On Autogas

Maputo — Autogas, the Mozambican company which sells the natural gas used to power those vehicles which have switched from liquid fuels to gas, says that the debt owed by the Maputo municipal bus company, TPM, is compromising its investments.

Autogas holds a monopoly on the supply of compressed natural gas for vehicles, and has been operating since 2008.

Of the 700 or so vehicles in Mozambique running on natural gas, 150 are the buses bought in India last year by TPM. But, although natural gas is considerably cheaper than petrol or diesel, TPM still finds itself unable to pay its fuel bills.

"The current debt has a significant impact on our projections, on the life of Autogas and on other companies, since we have suppliers who depend on Autogas paying them", said the company's general manager, Joao das Neves, in an interview with AIM.

He did not reveal how large TPM's debt is, but press reports last month put it at half a million US dollars. He said Autogas is now discussing the matter with Maputo Municipal Council, the body responsible for TPM.

Neves said that the debt means that Autogas cannot implement its planned investments, and cannot pay for the services of the Matola Gas Company (MGC), which operates the pipeline carrying the natural gas from Ressano Garcia, on the border with South Africa, to the city of Matola

Last month MGC interrupted the supply of gas to the Autogas fuel pumps, which had the effect of forcing dozens of TPM buses off the roads. MGC denied that this had anything to do with the debt, but was caused by electrical problems, solved by importing a powerful generator from South Africa.

Autogas currently only has two filling stations - one in Maputo (used by TPM) and one in Matola. The company wants to expand the capacity of the Maputo filling station, so that it can refuel more vehicles at the same time.

Neves said the equipment has been ordered, but without settlement of the TPM debt, Autogas cannot pay for it.

Likewise a back-up compressor to be used at the pumps has been ordered, but cannot be imported without payment. The same is true of a "slow filling system" which could be used to refuel TPM buses at night, thus reducing queues at the pumps during the day.

"So the debt has a chain reaction of implications which weighs very heavily on the growth of this business", said Neves.

But it is not just TPM's debt that is throttling Autogas. There are about 300,000 vehicles on Mozambique's roads, but only 700 have been converted to run on gas. Autogas offers to convert vehicles to run on gas, but the initial capital cost of the conversion is high.

So the great majority of vehicle owners have ignored Autogas - thus proving how innumerate motorists are. For the costs of conversion can be recouped within a year, for a saloon car, because of the huge difference in price between petrol and gas. In the case of one of the minibuses used in Maputo passenger transport the conversion cost can be recovered within four months.

Currently petrol costs 47.52 meticais (1.7 US dollars) a litre, and diesel 36.81 meticais a litre. The equivalent amount of natural gas only costs 17.75 meticais. Despite this striking price difference, motorists are not queuing up to convert their cars to gas.

Nonetheless, Autogas says its business is growing, albeit slowly. Conversion services have now been farmed out to four private companies - previously it was all done by Autogas itself. "Currently, we are converting more than 50 vehicles a month in the four conversion centres", said Neves.

Next year Autogas hopes to build seven gas filling stations along the main north-south highway - part of an investment plan, costed at 240 million dollars, which envisages building 200 filling stations in the next ten years.

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