New beginnings

• Chapter summary

Since the construction of the Cahora Bassa in 1975, Mozambique has secured its place as the only country in the region producing more energy than it consumes, leaving a great margin for exports. Electricity represents Mozambique’s third-largest export, mostly directed toward South Africa. Through infrastructure and projects such as the Cahora Bassa HVDC scheme, the Mozambique Transmission Company’s (MOTRACO) transmission line, the Mozambique-Zimbabwe Pipeline Company (CPMZ), the Republic of Mozambique Pipeline Company (ROMPCO), and upcoming plans for power stations and powerlines in Tete and Cabo Delgado, Mozambique has firmly ensured its position as a prime energy hub and provider for the region.

Looking ahead, the future of energy-related exports will undoubtedly be dominated by gas. This year marks the 10th anniversary of the first discovery of gas reserves in the Rovuma Basin, which will make Mozambique one of the world’s largest producers or, as some say, “the Qatar of Africa.” Since 2010, gas has been the main engine of Mozambique’s future, feeding premature expectations, an economic boom, an ensuing crisis, and an economic recovery. 2020 was expected to be a pivotal year for the largest gas final investment decision (FID) from ExxonMobil in Area 4, but things have been pushed back by COVID-19.

Indeed, Intercement’s CEO Edney Vieira told TBY there is a saying among businessmen that “Mozambique is the country where the future never arrives.” Momentum is not lost, though, as Italian company Eni’s plans for the Coral-South project in Area 4 are still on track to start production by 2022, and financing for Total’s Mozambique LNG project in Area 1 has been secured, with production planned to start by 2025. As the Chairman of the National Petroleum Institute, Carlos Zacarias, explained to TBY, “this represents a combined investment of USD50 billion and the single-largest private investment in the history of Africa.” The face of Mozambique will change, and companies across the entire supply chain are waiting for the moment the projects start rolling out—albeit this time with a more cautious optimism.

Even though energy generation and exports will only increase in the years to come, fieldwork research for this publication shed light on a growing shift in the discourse around energy, from national production to national consumption. Domestic demand has traditionally been low; this is hardly surprising given that industrialization is only at a start, and only 34% of the population has access to the national grid.

In 2018, however, President Nyusi inaugurated a national program, under the name ProEnergia, to attain universal energy access by 2030. ProEnergia is at the top of the president’s agenda for his second mandate, responding to a social as well as a political agenda. Public utility EDM has taken the lead in the implementation of the program, pushing through an ambitious program to increase national generation capacity by 600MW within the next five years, extending the grid and improving transmission efficiency.

According to former chairman of EDM Aly Sicola Impija, “EDM’s number of customers has doubled over the past decade, from 1 million to 2.1 million, representing around 10 million people. The next challenge is to expand the network within each district to reach all communities and add 300,000 new customers to the grid each year.” The plan is very ambitious, and critics have noted the lack of funding.

A key priority for the success of ProEnergia will undoubtedly be to increase the private sector’s involvement, especially in the mini-grid and off-grid space, through incentives and higher transparency. All eyes are now on the upcoming revision of the Electricity Law and further regulation. ✖