This Energy Sector Policy Note isintended to support the Government of Mozambique indetermining priorities for policy decisions with the aim ofdelivering efficiently produced, technically and financiallysustainable electricity supply to the Mozambican population.To support the development of recommendations, this Noteincludes simulation analysis based on the current financesof the sector. Electricidade de Macambique’s (EDM) corporatefinancial model was adapted for this work. Targets forelectrification are based on discussions with governmentofficials. EDM’s current generation pipeline and its timingwas taken as a given in order to simulate investment needsand evolution of sector finances under various tariff andfunding availability assumptions. The various simulationsand the broader sector quantitative and qualitativediscussion should support policy formulation andprioritization going forward.The power sector inMozambique faces three key challenges: i) to providereliable and efficient electricity supply to its customers;ii) to cope with the increase in the electricity demand fromits current (and future) customer base by expanding itsgeneration and transmission capacity; and, iii) to provideaccess to electricity to the vast majority of thepopulation. The importance of the timing of new generationto export power to South Africa also points to theimportance of the backbone transmission project to evacuatethe power from the center of the country – thereby enablingexports. Increasing access in line with Government targetswill require major investments. The Government needs toconsider the trade-offs between the ambition of the accesstargets imposed upon EDM and the sector’s broader financialviability for carrying out operations, maintenance andinvestment.Relaxation of the access target so that the 50percent target is achieved by 2030 instead of 2023 gives EDMmore liquidity in the first years.
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