Gov’t renews CEM electricity concession until 2040

The government has extended its electricity supply concession with Companhia de Electricidade de Macau (CEM) for another 15 years, according to an updated agreement published in the Official Gazette yesterday.

The concession introduces requirements aimed at strengthening infrastructure and supporting low-carbon development.

CEM, originally granted the concession in 1985, was set to see the current contract expire on December 31, 2025.

Under the updated concession, CEM customers will receive a 3% bill reduction if their local transformer experiences more than two outages lasting over 15 minutes, or if total annual blackout time exceeds four hours.

The maximum annual discount per customer cannot exceed 20% of the previous year’s average monthly bill.

The contract also sets a new cap on CEM’s profit, limiting the maximum return on investments to 8.2%.

Any profits above this threshold will be deposited into a “Tariff Stabilization Fund,” with one-third of the surplus returned directly to consumers if the account exceeds 15% of the annual revenue.

Additionally, the revised concession introduces new requirements for private equity funds seeking full tax exemptions. Fund managers must oversee more than MOP3 billion in assets and employ at least three local full-time staff to qualify.

Meanwhile, the utility must also ensure a stable and diversified electricity supply while gradually reducing greenhouse gas emissions.

The company is also tasked with developing youth training and employment programs and providing technical guidance for the city’s electrical industry standards.

According to CEM’s 2024 annual report, imported electricity from China Southern Power Grid in Guangdong accounted for 88.24% of Macau’s supply. Local generation contributed 8.62%, while the Macau Refuse Incineration Plant added 3.1%. Renewable sources, including solar power, represented a very small fraction of the total.

The renewed concession also permits CEM to expand into electricity-related businesses in Macau and the Guangdong-Macau In-Depth Cooperation Zone in Hengqin, subject to government approval.

Every three years, the company must submit a development plan outlining facility investment, maintenance, environmental measures, and smart grid implementation.

Separately, the government extended CEM’s concession to manage common services tunnels – underground infrastructure housing electricity, water, gas, and telecommunications pipelines – until 2040.

CEM posted a net profit of MOP792 million in 2024, up 4.6% from the previous year. Nam Kwong Group holds a 42% stake, while the government owns 8%.