RISING TIDE
The Mphanda Nkuwa Dam project will have a profound effect on the Mozambican energy sector, despite much of the generated electricity being sent for export.
Mozambique has recorded an average annual growth rate of 14% in electricity consumption over the past decade. In the country's five-year plan for 2015–19, the expansion of the energy sector has been described as one of the greatest economic challenges, especially in light of the growing industrial requirements of the nation. By the mid-2000s, proposals for the construction of several hydroelectric dams had already been put on the table. Currently, five power stations are planned, with priority given to the Mphanda Nkuwa Dam on the Zambezi river, approximately 60km downstream from the existing Cahora Bassa Dam near the city of Tete.
The building of the dam is not without controversy, with several environmental organizations, including the UN World Commission on Dams, warning of the potential environmental and socio-economic damage its construction could wreak. The way the dam operates, using peak moments of water power, will mean large daily fluctuations in river flow, which could possibly damage the existing irrigation system and aquaculture, as well as severely impact on fishing industry. The Ministry of Energy has countered all of these claims stating there will be “no identifiable impact on the Zambezi delta and fisheries in the Indian Ocean."
The ministry sees the Mphanda Nkuwa Dam as a priority project, part of a larger plan that includes the construction of four other dams in the country. In total, the combined projects should create an output of approximately 3,600MW, of which the Mphana Nkuwa Dam will account for 1,500MW.
The total costs of the project have doubled since 2009, and are now estimated at $4.2 billion. Investments are mostly coming from the China-owned Exim Bank, which is known for similar large-scale infrastructural investments on the African continent, in collaboration with the Brazilian construction company Camargo Correia, the Mozambican investment company Energia Capital, and EDM, the publicly-owned electricity company of Mozambique.
Once the dam is completed, about 75% of the generated power will be sold to Eskom, the South African power company, which already has an agreement in place that will be valid until 2029. This agreement outlines an annual purchase of 1,100MW, with 15% going to Zimbabwe. The remaining 10% will be used for domestic consumption, as the country itself lacks the required transmission infrastructure to distribute electricity across rural areas, and will not expand the network for some time due to the high cost of doing so. It is this latter point that has attracted most criticism, as many rural areas in Mozambique need electricity. Moreover, it is suggested that poorer southern regions will eventually have to buy back energy from South African suppliers who operate close to the border.
The current capacity of Mozambique's total electricity production is approximately 2,300MW, meaning that an additional 1,500MW will have a massive impact on the domestic energy sector, and make the Mphanda Nkuwa Dam into the largest production facility in the country. The 'Powering Africa' report on Mozambique states that Mozambique has a total of 6,000MW of renewable energy potential. The construction of the dam would unlock a full quarter of this.
The administration of President Filipe Nyusi has committed itself to making expansion of the electricity sector a priority, and the construction of the Mphanda Nkuwa Dam will be of pivotal importance in this regard. Since the largest share of the production capacity will be exported, the actual impact on the domestic penetration of electricity remains small, though the liquidity these electricity exports bring could potentially benefit the financing of the expansion of the transmission grid, allowing for the electrification of rural areas in the future.
RISING TIDE
TABLE OF CONTENTS
Review: Economy
Much to Gain
Despite numerous years of considerable economic growth, Mozambique has been unable to retain its wealth and bring more than half of its population out of poverty. Developing one of the world's largest gas reserves and becoming a regional exporter of energy may be the solution.
read articleFocus: Aluminum
Foil Plans
Mozambique is the second-largest producer of aluminum in Africa and the 14th in the world. Since 2000, it has been producing aluminum for export, and in 2015 Midal Cables opened a factory near Mozal; the country's largest aluminum smelter. This could be the start of a Mozambican aluminum value chain.
read articleInterview
Ben James, Managing Director, Baobab Resources
TBY talks to Ben James, Baobab's Managing Director, resident in Mozambique. A geologist by training, Ben has been directly involved with the development of the Company's Tete Project from a greenfields iron ore discovery to an asset on the verge of corner-stoning Mozambique's nascent steel industry.
read articleFocus: Aluminum
Aluminum Legacy
Mozambique is the second-largest producer of aluminum in Africa and the 14th in the world. Since 2000, it has been producing aluminum for export, and in 2015 Midal Cables opened a factory near Mozal; the country's largest aluminum smelter. This could be the start of a Mozambican aluminum value chain.
read articleInterview
Hon. Jorge Olívio Penicela Nhambiu, Minister, Science and Technology, Higher and Technical Vocational Education (MCTESTP)
TBY talks to Hon. Jorge Olívio Penicela Nhambiu, Minister of Science and Technology, Higher and Technical Vocational Education (MCTESTP), on bringing science and technology to rural areas and increasing research in the country.
read articleFocus: E-government + E-bau
Digital Decisions
Between 2015 and 2016, Mozambique fell five positions in the World Bank's Ease of Doing Business Index. The government is investing in the GovNET and e-BAU platforms to facilitate procedures and cut the costs of acquiring business licenses and improving services provided to the public.
read articleReview: Health
Time for a check-up
Mozambique's healthcare budget rose to $561.5 million in 2015, an increase of 1.1% on expenditure in 2014, accounting for 10.2% of the state budget. Total healthcare expenditure in 2014 was $477.5 million. The Ministry for Health oversees the sector and is responsible for setting the budget each year.
read articleInterview
Dr. João M. Carvalho Fumane, Director General , Hospital Central de Maputo (HCM)
TBY talks to Dr. João M. Carvalho Fumane, Director General of Hospital Central de Maputo (HCM), about the range of services on offer and what is being done to further excellence in the health sector
read articleInterview
Hon. Jorge Ferrão, Minister, Education and Human Development
<span style="line-height: 1.6em; background-color: initial;">TBY talks to Hon. Jorge Ferrão, Minister of Education and Human Development, on the goals of the ministry, the role of local languages, and tackling teacher absenteeism.</span>
read articleInterview
Prof. Doctor João Leopoldo da Costa, Rector, Instituto Superior de Ciências e Tecnologia de Moçambique (ISCTEM)
TBY talks to Prof. Doctor João Leopoldo da Costa, Rector of Instituto Superior de Ciências e Tecnologia de Moçambique (ISCTEM), on the perils of the internet on education and the quality of its high school.
read articleReview: Tourism
Mozambeach
With white-sand beaches, scuba diving, and game reserves among its wide range of accommodation, Mozambique is a goldmine for tourism. However, to attract the number of tourists the country is aiming for, and entitled to, it will have to compete with its considerably more popular neighbors.
read articleReview: Legal
Smart Choices
Foreign investments are sources of capital, foreign exchange, and technical know-how for developing countries such as Mozambique. Over the past three decades, Mozambique has been successfully striving to ensure a favorable legal framework for foreign private investment.
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