Mozambique Energy Situation

1.1 Energy Sector

Mozambique is one of the poorest countries of the world with about 54% of the population living below the national poverty line. Forest resources satisfy more than 85% of total domestic energy requirements and more than 95 % of energy supply in rural areas. Mozambique has considerable but little exploited energy resources, including natural gas, coal, hydro, oil, solar, biomass and wind. According to a recently published study, Mozambique has the potential of producing 21 million litre of ethanol and 40 million litre of bio-diesel p.a.

The energy sector is key to the country's economy already today, since energy exports make up a large share of total foreign exchange earnings. Moreover, the availability of cheap elec-tricity is one of the main reasons for the significant foreign direct investment in energy-intensive industries in Mozambique. Energy exports (hydropower, coal, gas, biomass and possibly oil) and projects to cover the growing domestic electricity demand will play an increasingly important role in the years to come. The liberalisation of the power sector initiated in 1997 allowed for third parties from the private sector to enter the power generation, transmission and distribution markets.

Mozambique's Poverty Reduction Strategy Paper sets quantitative targets for rural electrifica-tion. A rural electrification strategy has been adopted and FUNAE, a fund for promoting ac-cess to energy, has been established. At the same time both the Ministry of Agriculture and Ministry of Energy spend big efforts in developing a bio-energy industry for rural electrification and transport purposes, as well as for export.

1.2 Problem Situation

Access to electricity is among the lowest in the world, especially in rural areas where only 1% of the population is supplied. The national grid only reaches a small part of the country. Many district capitals depend on expensive and often unreliable power generation with diesel generators. Outside these towns, the situation is even worse. The overwhelming majority of rural households, most rural schools, health centres and administrative posts are without access to electricity. Lack of mechanical power is a bottleneck for the rural subsistence agricultural production. Rural areas lack electricity for lighting, radio and communication in households and for refrigeration in small commerce. Lack of access to electricity restricts the local population’s opportunities for income-generating activities. Though diesel based mini grids are already established and being initiated in rural areas. On the one hand the use of diesel is not sustainable (environmental hazards, limited availability and reliability of supply, volatility of prices), on the other hand these kinds of schemes are based on private and community involvement and are initiated mostly without any involvement of public support and are not dependent on subsidies or external donor aid. This phenomenon provides a massive potential for sustainable and large scale rural electrification.

Bio-energy, especially the use of pure vegetable plant oil in adapted diesel generators, provides support in overcoming this situation. However, the GoM as well as the private sector has only little experience in the sustainable production of biomass and production of energy out of biomass.