MORAL SUPPORT

Mozambique 2016 | ENERGY & MINING | FOCUS: RENEWABLES

80% of the Mozambican population does not have access to the grid. Power generation using renewable sources has a large potential in the country but is in need of clear regulatory framework.

In the Paris Agreement under the United Nations Framework Convention on Climate Change (UNFCCC), sealed on December 12, 2015 and signed by 200 countries on April 22, including Mozambique, nations acknowledge “the need to promote universal access to sustainable energy in developing countries, in particular in Africa, through the enhanced deployment of renewable energy." The Intended Nationally Determined Contribution (INDC) of Mozambique to the UNFCCC includes, among other policies and programs, a New and Renewable Energy Development Strategy, a Renewable Energy Feed-in Tariff Regulation, and a Renewable Energy Atlas for Mozambique.

In terms of sustainable energy though, Mozambique is still a step behind. On February 9 and 10, 2016, Maputo had its first conference on investment in power infrastructure and renewable energy. The fact that it was the first such conference indicated that there are not many renewable projects in the country, at least no large-scale ones, and that there is great disinformation surrounding the area, though the potential for investment is enormous. The mere fact that 80% of the population does not have access to the grid hints that power electrification in this country has massive potential and can be developed from the outset by using renewable sources.

In order to develop this sector, there must be a sophisticated and efficient legal framework in place. At the moment, in order to produce, transport, distribute or commercialize electrical power in Mozambique, individuals or corporate entities need a concession from the government that may be launched by the Council of Ministers (for projects with a nominal minimum capacity equal or above 100MVA), by the Ministry of Energy (for projects with a nominal minimum capacity equal or above 1MVA and under 100MVA), or by local organs or municipalities (for projects between 1MVA and 100MVA under their jurisdiction).

Nevertheless, regulation is not clear because the Electricity Law and the Public-Private Partnerships Law (PPP Law) have, in some cases, different regimes, meaning a company can be directly awarded a project under the PPP Law even though the Electricity Law states it should go through a public tender. Also, companies need to take into account that the only entity entitled to purchase electrical power produced by independent power producers is Electricidade de Moçambique (EDM). Besides, projects are only eligible if they are within a diameter of 10km from the connection point and, what is more important, after three years the government can make amends to the tariffs on solid grounds, though the definition of solid grounds is uncharted territory.
This conference demonstrated how important it is for Mozambique to implement the INDC programs and policies if they want to encourage substantial investment in this industry. A good framework would support the socioeconomic development and boost all the other sectors in a context where urban and rural areas have only 68%, and an alarming 5.7% access to energy, respectively. Vasco de Encarnação Jorge, Administrator of Gavedra Moçambique, stated in a TBY interview that they occasionally install solar kits in small villages, but one of the major problems is maintenance. “For the benefit of the people and country, we need to promote this area more. The potential in this area is extensive, but both technicians and users must be trained," he noted.

While everyone waits for the LNG project to happen and complains about the low oil prices, Jaime Corniche, Head of Operations of UNIDO Mozambique, reminded everyone in the conference that “enabling greater access to energy may be more beneficial for creating prosperity than producing oil and gas."