AfDB technical assistance aims to optimize development of Mozambique’s energy resources

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The Board of the African Development Bank Group (AfDB) approved a US $15.3 million  African Development Fund loan for technical assistance to the Government of the Republic of Mozambique. The loan will help the Government to create the skills and competencies required to deliver optimal gas and power projects as well as support the financial closure of three mega projects (electricity transport line for Sociedade Nacional de Transporte de Energia / hydropower development project of Mpanda Nkuwa and liquid natural gas trains). The additional US $0.77 million of the full project cost of US $16.04 million will be supplied in kind by the Government.

The technical assistance will support Mozambique in making informed decisions on energy resource management and exploitation, as well as in developing robust energy/power infrastructure development strategies and operations. Specifically, the assistance will go to develop the requisite skills in the country’s public energy companies – Electricidade de Mozambique (EDM), Empresa Nacional de Hidrocarbonetos, EP (ENH) – and in the governing ministries – Ministry of Energy (ME), Ministry of Mineral Resources (MIREM) and the Ministry of Planning and Development (MPD). Over the long term the project will enhance economic development through increased financial returns from power generation, transmission capacity and commercialization of the new gas finds.

Alex Rugamba, Director of the AfDB’s Energy, Environment and Climate Change Department, said, “Through this support, we hope to enable Mozambique to leverage its natural resources for growth and poverty reduction and to reduce its energy deficit. This project also provides the AfDB with an opportunity to apply and share knowledge generated under past projects in member countries such as Ghana, Egypt and Nigeria.”

The Government of Mozambique and its respective departments are currently constrained by limited experience, and lack of critical know-how. Consultants will be engaged on a short-term basis to provide hands-on training to the personnel of the various government agencies as well as support the agencies in the preparation of the three mega projects. The range of training includes intensive three-day sessions for senior officials, two-week sessions for middle management staff, and six-month to four-year courses for diploma and degree graduates. When the technical assistance is finished in 2017, the Government should benefit from well-conceived and enabled large-scale gas and power projects; the improved management of gas and power public-private partnerships in ENH, EDM, ME, MIREM and MPD; and the improved monitoring and management of the mining sector.

The energy sector in Mozambique is changing rapidly. This project comes in response to the pace of economic growth and the energy boom that the country is experiencing due to recent offshore gas finds and the exploration of its large coal reserves and the need to develop the country’s large hydro resources. For instance, gas reserves found offshore in the Rovuma Basin, Cabo Delgado Province, have put Mozambique on the international map as having one of the world’s largest gas discoveries. The country is also endowed with abundant hydropower resources; second to the DRC in the SADEC (Southern African Development Community Region).

The Government has expressed its intention to develop these resources to (i) provide the country with electric power essential for short- and long-term economic development; (ii) propel the country from a developing to an emerging economy; (iii) increase the country’s role in the region as a major clean energy supplier; and (iv) accelerate regional integration and strengthen regional energy trade while bringing in substantial export revenues and achieving economic growth.

Mozambique is one of Africa’s fastest-growing economies, with an average of 7.3 per cent real GDP growth per annum over the last decade. The GDP, driven mainly by abundant natural resources, has led to a growing average electricity demand of 14 per cent per annum. The energy demand in turn has been stimulated by a combination of industrial demand and aggressive plans to roll out electrification to domestic consumers.

The AfDB’s technical assistance is consistent with the objectives of Mozambique’s long-term development strategy, Visão 2025 (Vision 2025), and its five-year Medium-Term Plan (PQG 2010-2014), where the expansion of electricity infrastructure is a top priority.