Strengthening Mozambique’s Power Grid

In the years following its civil war, Mozambique has achieved a remarkable economic transition. Spurred on by political stability, steady macroeconomic management, reconstruction, and reform, Mozambique has become one of Africa’s frontier economies.

This growth, however, has not been matched by a reduction in poverty rates or an increase in jobs. The energy sector may be one reason why.

Reliable, affordable, and sustainable electricity are a necessary condition for economic growth, competitiveness, and poverty reduction. While Mozambique has made significant strides in expanding electricity access in recent years — from 6% in 2006 to 26% in 2017 — energy infrastructure and generation capacity are still weak. Access to grid-based electrification in rural areas is extremely low — approximately 6%. At the same time, demand for energy has grown while new electricity generation costs have increased, affecting the financial sustainability of the national utility.

To help Mozambique revamp its energy sector, the World Bank has approved a new grant for US$150 million (the Power Efficiency and Reliability Improvement Project) to help rehabilitate and upgrade network infrastructure and improve the operational efficiency of the national utility. The bulk of the support will help reinforce the transmission and distribution lines, install additional capacity, and purchase reactive compensation equipment in the cities of Lichinga, Maputo, Matola, Nacala, and Pemba.

The World Bank’s Energy Sector Management Assistance Program (ESMAP) funded key sectoral studies — including a Policy Note and a Cost of Service Study for the national utility — that underpinned the design of the $150 million project. The studies provided timely advice to the government across the power sector value chain and laid the foundation for developing the National Electrification Strategy as a roadmap for scaling up electricity access in a technically and financially sustainable manner. The strategy outlines a concrete plan to address the gaps identified from the sectorwide stocktaking, such as the lack of an institutional set up and an adequate business model to promote access, providing a clear framework for electrification.

In addition to detailing the policy and financing support required to meet the country’s targets through 2030, the strategy also lays out key implementation steps and financial requirements to improve the conditions for private sector participation.

ESMAP is also conducting a geospatial electrification analysis based on the models proposed in the National Electrification Strategy. The analysis will help the government map out and prioritize infrastructure investments through spatial planning, with a strong focus on improving energy supply and access in both urban and rural areas. These efforts will also help diversify the energy supply through a greater contribution from renewables.