1 Energy Sector
Power generation in Mozambique is dominated by the hydroelectric facility Cahora Bassa, located on the Zambezi River in western Mozambique. It contributes to 87% of the 2,400 MW production capacity in the country although four fifth are exported to South Africa and Zimbabwe. Hydropower is most important in terms of resources – it disposes of an estimated potential of 12.5 GW. The second major renewable energy potential lies in solar energy, since Mozambique is located in the so-called “sunbelt” with a relatively high but yet unused solar radiation capacity. Wind energy has less potential and is reportedly limited to isolated areas with average winds above 2.2 m/s in Maputo, some coastal areas of Beira and Quelimane and some parts of Tete and Niassa, where the main potential use is for wind-driven water pumps.
The current capacity of 2,400 MW will be supplemented with 550 MW and 2,500 MW from the Cahora Bassa North and Uncuna Hydro stations when they become operational in 2011. A 1,000 MW Thermal Unit powered by natural gas is also planned for the Moatize coal production area.
Mozambique is self-sufficient in energy with the exception of liquid fuels. Despite the extensive modern resources, biomass is by far the country’s predominant energy source. Firewood and charcoal (woodfuels) are used by over 95% of the rural households – and by 85% of the total households.
While the energy consumption is dominated by the consumption of biomass, only 8.2% of the population had access to electricity in 2006 (with an increase of 6.8% in comparison to the previous year) and an estimation of 10% in 2008. In 2006 the electrification rate at urban areas was about 20% while at rural areas it was about 1-2% of the population. In 2006 the maximum peak of the electricity system was 320 MW and the maximum peak in the Southern system was 216 MW.
Mozambique is a vast country with a low population density of 27 per square kilometre. It is therefore expensive to distribute any commercial form of energy. Considering grid connection fees of 3,500 MZM (146 US$) and an income per capita of 310 US$ in 2008 (WB 2008), electricity is unaffordable for most part of the population especially due to the prohibitive up-front costs.
1.1 Electricidade de Moçambique (EdM)
The most relevant institution in the energy sector is Electricidade de Moçambique (EdM) which is responsible for the transport, distribution and commercialisation of electricity in Mozambique. EdM is the Mozambican national utility transformed from a state monopoly to a public enterprise in 1995. Nowadays it is a government owned corporation. EdM controls the national grid network and the limited liability company PETROMOC (Mozambican State Company for Petroleum) which administrates petroleum products. The liberalisation of the power sector initiated in 1997 allowed for third parties from the private sector to enter the market.
EdM applies a uniform tariff structure throughout the country, which implies cross-subsidisation from the much more lucrative Southern region to the poor and remote regions in Central Mozambique and especially the North. There, electricity supply and distribution is more expensive than the tariff charged due to long distances and low customer density combined with low consumption per customer.
1.2 Problem Situation
Access to electricity is among the lowest in the world, especially in rural areas where only 1-2% of the population is supplied. Access to electricity in the capital Maputo amounting to 38% of the population, in the Southern Province close to Maputo (Maputo Province and Gaza) accounting for 10% of the population and in the Central Province Sofala (where the second biggest city Beira is located) accounting for 8.4% of the population is much higher than in the other more rural provinces.
As for electrification of the provincial capitals, in 2007 Mozambique had all 11 provincial capitals connected to the national grid, drawing power from Cahora Bassa. But of the 128 districts, in 2007 there was permanent electricity in only 60 of them, deriving from either the national grid or that of neighbouring states such as Malawi and Zimbabwe. Furthermore the people in the district capital often depend on expensive and sometimes unreliable power generation with diesel generators, supplying electricity for a limited number of hours per day. Outside these towns, the situation is even worse. Apart from the overwhelming majority of rural households, most rural schools, health centres and administrative posts are without access to electricity.
Nevertheless, as a recently executed baseline found out many households spend a considerable share of their income for energy in the form of kerosene, batteries and charcoal. At Matola area poor households spent 22% of their total expenditures and about 12 € on energy per month. In the more rural area Chua (Manica Province) the households spent 12% of their total expenditures and about 5 € on energy per month. Lack of access to electricity restricts the local population’s opportunities for income-generating activities. Therefore, energy is frequently mentioned as a key constraint to local development by the actors involved in participative development planning.
In 2008 the Minister of Energy Namburete declared the hope of the Mozambican government that there would be permanent electricity in 108 district capitals by 2010. Furthermore he pronounced the hope for an average of 70,000 new electricity connections a year over the following years.
2 Institutional and political Environment
2.1 Main actors
· The National Directorate of Energy (Direcção Nacional de Energia – DNE) in the Ministry of Energy (MIREME – Ministério da Energia), formulates overall energy planning and policy. The basic working document of the Directorate is the National Energy Sector Strategy established by decree 24/2000. The Mozambican Ministry of Energy still supervises the EdM as to its responsibilities concerning the generation, transmission and distribution of electricity.
Under the 1997 reform programme two new institutions have been created:
· The National Electricity Council (Conselho Nacional de Electricidade – CONELEC) was created in 2004 based on the energy reform of the late 1990. It mediates and arbitrates differences arising with energy supply policy, projects, concession requests etc. Although the Ministry of Energy still retains control of the high voltage transmission system and mini grids, CONELEC becomes more and more autonomy and acts independently from the Ministry. Further regulatory action is provided by the Southern Africa Power Pool (SAPP) which regulates all cross border power transactions in the region.
· The National Energy Fund (Fundo Nacional de Energia – FUNAE) was created in 1997. FUNAE focuses mainly on renewable energy technologies and rural electrification. Its main purpose is to disseminate low-cost energy services by mobilising funds and providing loans in order to benefit low-income populations. It has funded numerous projects and continues to assist the private sector and NGOs with regards to information required for entering the energy sector in Mozambique. FUNAE used to be financed by DANIDA that are prepared to pull out their activities by now.
· The National Directorate of New and renewable Energies (Direcção Nacional das Energias Novas e Renoavais – DNENR) and the National Energy Fund (FUNAE) are actively promoting the development and use of renewable energy technologies through funding and policy.
2.2 Legal Framework
The legal energy policy and planning framework in Mozambique is comprised of five documents.
· The National Energy Policy (1998) is published by decree 5/98. This document focuses on energy in terms of economic growth and tackles issues with suppliers, access and availability of energy to inhabitants, reforestation, investment, efficiency and a more competitive business sector. It promotes institutional capacity building, exports of energy products and more efficient, dynamic and competitive business sector.
· The National Energy Sector Strategy (2000) established by decree 24/2000 attempts to transform the intentions in the energy policy into actions.
· Rural Electrification Strategy Plan (2000) is a Norwegian study which currently serves as an official guide to the rural electrification of Mozambique. It raises direct poverty-energy linkages, starting with the recognition of both low per capita incomes and the fact that biomass is by far the largest energy source for the population. It acknowledges the importance of a crosscutting approach stating that initiatives in the sphere of energy will support programmes and investments aimed at increasing the income of the population as well as satisfying health, education and water supply requirements.
· Implementation Plan and Final Report of the Rural Electrification Strategy Plan (2001)presents three types of technical energy supply alternatives (grid extension, local isolated grids and stand-alone systems). It assesses and compares a variety of energy resources – grid electrification, diesel generation, small hydropower, PV, wind, biomass, hybrid systems and batteries – and identifies their bottlenecks.
· The Electricity Act 21/1997 allows for private participation in the electricity sector and also defines the national transmission network.
In addition there are the Poverty Reduction Action Plans I and II who are defining a governmental strategy in order to alleviate poverty in Mozambique. Although those documents are gradually revealing more sensitivity to the energy dimension of poverty there is still no thorough analysis leading to a coherent strategy and appropriate pro-poor approaches and programmes.
Government Five-Year Programme 2000-2004: Its main objectives is reducing absolute poverty through social services, rural development, and rapid and sustainable economic growth development mainly in the rural areas. Twelve of the 15 priority energy actions involve electricity. The remaining three are (i) expanding rural access (ii) diversification of energy sources to promote sustainability, including biomass and (iii) more widespread distribution of kerosene.
TheAction Plan for the Reduction of Absolute Poverty (PARPA) 2001-2005 promotes the reduction of environmental impacts of non-renewable resources, reliable energy supplies for economic growth and new and renewable energy sources in the electrification of remote areas. Furthermore it stresses the importance of electrification of districts with economic potential and of private sector participation in the energy field.
TheAction Plan for the Reduction of Absolute Poverty II (PARPA II)establishes target number for people provided with access to electricity in the future. It also deals with the issue of intensifying CONELEC’s work. The targeted outcomes until 2009 are:
· CONELEC operates efficiently
· 800,000 people – access rate of 12% – are provided with new and sustainable access to modern energy
· and 500 of new institutions are provided with sustainable access to modern energy outside the grid.
Until the end of November AMES-M contributed sustainable access to modern energy for 27,323 people to the targeted number of PARPA II.
3 Activities of other stakeholders and donors
The most activities are executed in the field of electrification. Danida, Norway/SIDA, World Bank and AFD have activities in generation, transmission or distribution of electricity.
Furthermore World Bank and AFD have some programmes in the field of transmission and distribution of electricity. All of them are active in the area of rural electrification as well.
Grid based activities are supported by the two main programmes Energy Reform and Access Project (ERAP) and Electricity Project (EP).
In addition DANIDA through FUNAE, the World Bank through the ERAP program and the Spanish cooperation as well as UNIDO works with renewable energy and Solar PV at rural areas. Furthermore some donors give consultancies to important institution such as EdM, DIPREME, DNE, FUNAE and CONELEC. The Norway Cooperation and AFD support the development of the oil and gas field. ADF is financing the Pande and Temane projects by a loan.
Besides FUNAE and the Swedish International Development Agency who are supposed to fund hydropower plants, there are no major activities of other donors in the field of Pico and Hydro Power. Next to the Pico Hydropower project at Chua no other project has started yet.
At the moment some changes are taking place regarding the donor intervention: DANIDA’s Energy Sector Programme Support (ESPS) in Mozambique phased out in 2008. It comprised Support to the National Energy Sector Institutions, to the National Electricity Operator (EdM)
and to Decentralised Energy Management. From the current year on it will be concentrating its activities more on climate and environmental issues. SIDA will be working with the Ministry of Energy and NORAD with EdM. There is no donor who would take over the support of FUNAE that was provided by DANIDA before. However, FUNAE receives funding from several sources as the European Union, the World Bank, the Spanish Cooperation and others.