Background Report on Mozambique’s Power Sector: Utility Performance & Loss Reduction

The country's GDP per capita is USD $1,200, and its economy has maintained strong growth over the last decade, driven by foreign direct investment in the mining, electricity, tourism, construction, and telecommunication sectors. The majority of investment has been driven by a few large "mega projects" or companies, with few medium-sized enterprises. Mozambique's electricity sector is dominated by government-owned entities, with some introduction of private sector participation. The country's electricity infrastructure is underdeveloped, with significant challenges for electricity access due to its vast and often challenging environment. The World Bank estimates that 15% of the population has access to electricity, with 26% coverage in cities and 5% in rural areas. Net electricity generation in Mozambique was 16.7 billion kilowatt-hours in 2011, with almost all generated from hydropower and a small amount from natural gas. The demand for electricity in Mozambique is expected to continue growing at 8.2% annually for the next 15 years, driven by economic growth and increasing energy-intensive industries such as the Mozal aluminum smelter and related activities in mining, manufacturing, and construction. The country's proven natural gas reserves are estimated to be approximately 100 trillion cubic feet, and its Tete Province is projected to hold significant unexploited coal reserves. These resources could lift Mozambique's economic growth rate by two percent annually from 2015-2023. The electricity sector in Mozambique faces significant challenges, including technical and commercial losses, loss reduction analyses, and strategies for slum and rural electrification. The country has a long history of state-owned enterprises, dating back to its independence from Portugal in 1975. The FRELIMO party took control and established a one-party state aligned to the Soviet bloc and supportive of communism. This has led to a reliance on government-owned entities in the electricity sector, with some introduction of private sector participation. The World Bank estimates that 15% of the population has access to electricity, with 26% coverage in cities and 5% in rural areas. Net electricity generation in Mozambique was 16.7 billion kilowatt-hours in 2011, with almost all generated from hydropower and a small amount from natural gas. The demand for electricity in Mozambique is expected to continue growing at 8.2% annually for the next 15 years, driven by economic growth and increasing energy-intensive industries.