When huge reserves of gas were discovered in Mozambique in 2010 and 2011, many Mozambicans thought gas would swiftly solve all their energy problems. But the country’s energy sector will only be able to deliver its full potential if national policies and regional cooperation improve.
That was the dominant view among Mozambican leaders who participated in the Africa Progress Panel Mozambique Country Dialogue on 26 November 2015, which focused on the Africa Progress Report 2015, Power, People, Planet: Seizing Africa’s Energy and Climate Opportunities.
Like many other African countries, Mozambique faces energy deficits despite its huge energy resources. Two-thirds of Africans – 620 million people – lack access to modern energy. The Africa Progress Report 2015 consequently called for a ten-fold increase in power generation to provide all Africans with access to electricity by 2030.
How can Mozambique, specifically, best utilize its energy resources to power the growth and transformation of its economy? Participants at the country dialogue initiated by the Africa Progress Panel identified some key areas for action to speedily provide greater energy access to all in the country.
Multiple Complementary Options
Gas cannot be a panacea; it can only complement the other energy sources available in the country. In addition, for gas to be profitable there is a need for good infrastructure — roads, ports and airports, as well as pipelines and storage. “Mozambique has gas but doesn’t have the infrastructure needed to consume it,” an energy expert pointed out. This is one reason Mozambique should pursue a range of solutions to meet its energy needs while developing better infrastructure.
Participants in the dialogue agreed that Mozambique will need to consider all the energy options that it has, including its abundant supplies of hydro power.
Mozambique plans to limit the use of fossil fuels, to reduce greenhouse gas emissions that cause climate change. One commentator highlighted that a desirable energy mix in the current context could prioritize the use of fossil fuel energy for industry, while encouraging greater use of renewable energy by households and communities.
Various Financing Schemes to Consider
Even the best energy mix can be compromised if it is not supported by adequate financing plans. Financing energy projects in Africa is usually a daunting challenge for both governments and the private sector due to the lack of supporting structures. However, there are solutions to apply depending on the specificities of each energy project.
For some participants, a first step would involve a “segregation of energy needs”, whereby clear decisions are made about the energy needs of different regions of the country. “We need to decide where to do off-grid and where else to do on-grid”, said one investor from a private energy company. For entrepreneurs who want to focus on rural energy, there is a type of financing suitable, a kind of structure and incentives that would work for the project.
Deep and Visionary Reforms of the Legal and Regulatory Frameworks
Participants noted that old investment laws and regulatory frameworks have not yet allowed Mozambique to fully benefit from its abundant energy resources. The new laws seem to have put the country back on the right track, although it was stressed more caution and tact is needed in order to design better laws and smart government policies.
Many participants argue that Mozambique needs to have an energy plan which takes into account the bigger picture, powered by a long-term strategic vision for effective energy policies.
Regional cooperation within Southern Africa and beyond also needs to be enhanced. Mozambique is surrounded by countries with heavy energy needs but finds it difficult to sell its renewable energy to neighboring countries, which happen to be investing massively in fossil fuel energy. Participants therefore recommended the renegotiation of regional treaties and tariffs that would enable the Mozambican renewable energy sector to blossom.