Mozambique leads southern Africa in energy resources

Wide scope for investment in rapid development

Judging by its resources, Mozambique has southern Africa's greatest potential for energy production. Most of these resources lie untapped, awaiting the investment needed to realise this potential.

The annual GNP per capita in the country is $US90, with an average annual growth of 3.8%. The natural forest is the main supplier of fuel wood for domestic needs of the rural population. Studies undertaken show that 83% of the total energy consumption in the country comes from the forest, and that natural forest also supplies fuel wood to some industries and 60% of the urban population.

According to the population census undertaken in 1997, the population of the country is about 16 million inhabitants, (while estimates for 2000 indicate that it has now reached about 18 million) with more than 1 million living in capital city, Maputo. More than 80% of the total population is living in rural areas grouped in small communities spread all over the country.

Average energy consumption in the country is 40kg oil equivalent per capita. The energy from the main grid covers only about 6% of the Mozambican population. People outside the area of the grid are mainly those living in rural and suburban areas.

Hydropower is the most important commercial energy resource, with the potential estimated at about 14,000MW, of which about 2,488MW has so far been developed. A total of 2,075MW is installed at Cahora Bassa dam on the Zambezi river, a project constructed by an international consortium at the close of the country's colonial era.

The installed capacity of Electricidade de Moçambique (EDM ) the former monopoly electricity utility is 315.5MW, of which 108.9MW is hydropower and 204.6MW is thermal. However the dependable capacity is estimated at 219MW of which 95MW is hydropower.

Fossil fuel reserves

Besides the hydropower resources, Mozambique has large sedimentary basins of natural gas. At present, three reserves of gas have been discovered on-shore in Pande, Temane and Buzi. The total natural gas reserves are estimated to be as high as 700x109 m3.

Pande gas is used for local generation of electricity. At present, a total capacity of 660kW has been installed in Vilankulo and Inhassoro. There are plans to use this gas in an iron industry project in Maputo, and for export to South Africa.

Mozambique has three relatively large known deposits of coal at Moatize-Minjova, Senangoe and Mucanha-Vuzi, all of them in the province of Tete. Total coal reserves are estimated at about three billion tonnes.

In August 1997 a new Electricity Act was approved by parliament to define:

• the general policy for the organisation of the electrical energy sector and the administration of the supply of electrical energy
• the general legal framework for electrical energy generation, transmission, distribution and sale within the country, as well as its exportation to and importation from outside of the national territory, and granting concessions for such activities.

New municipal legislation was enacted in 1997, giving municipalities certain functions in investment planning and the operation of electricity services in local authorities.

A study of the possible reforms and regulation of the electricity sector was started by the government in the same year. The objectives were to follow up the intentions of the Electricity Act reforms through the granting of concessions, including proposals for tariff regulation.

The main recommendations now being considered by the Government, include;

• the adoption of a single buyer model, with competition as the model for reform;
• the restructuring of EDM through vertical separation into hydro generation, transmission (including power procurement) and distribution business, complemented by horizontal separation of distribution through concessions (to EDM municipalities and private participants) for well-defined geographical areas; and
• the strengthening of private sector participation by:

1. introducing independent power producers (IPPs) in new generation projects, and possibly selling the existing hydro business;
2. letting management contracts for distribution business followed by leases/concessions contracts; and
3. outsourcing non-core transmission and distribution functions.

• establishment of a mechanism and institutional arrangement for tariff regulation;
• independent regulatory agency established by primary legislation; and
• consideration of a multi-sectoral regulatory agency ( at least for electricity and gas) as longer term goal.

Making a start

The maximum peak demand for electricity in 1998 was 208MW. The government of Mozambique, through the private sector, is developing many projects which will increase the consumption of electricity up to approximately 3000MW. At present, under a co-operation agreement between the Mozambican and Norwegian Governments, a programme has been started to elaborate a strategy plan for rural electrification and an energy master plan for the next 10-15 years.

The National Directorate of Energy (DNE) is a central organ of the Ministry of Minerals Resources & Energy, responsible for study, conception and producing energy policies. The organisational structure of DNE, was approved 16th of April 1997 by ministerial diploma and the main tasks of DNE are as follows:

• to study, to propose and to administer the energy policy in the Country;
• to promote the diversification of energy use and optimise the use of various energy sources;
• based on the development of the economic perspectives of the Country, to determine environmental issues, to provide the plans and the programmes for the development of the sector;
• to promote and to maximise the rational use of the national energy sources with relevance to the installed capacity, namely, through the encouragement of investors;
• to promote the co-operation with public and private institutions, national or foreign, in achieving the maximum potential in the technical development and sector regulation.

The National Directorate of Energy
Ministry of Mineral Resources and Energy
Maputo, Mozambique

Tel/Fax: +258 1 303063
or 420245, or 420963