Summary


The Electricity II Project was initiated by the Government of Mozambique (GoM) as a follow up to the Electricity Project I and was appraised based on surveys undertaken by Electricidade de Mozambique (EdM) to extend and strengthen the national power grid to the rural and peri-urban areas of the Maputo Province. The project was financed through a US$21.55 million loan from the ADF and US$3.74 million contribution from EdM and was implemented between July 2008 and december 2003. Technical Assistance for the project was provided by the Swedish International Development Agency (SIDA).

 

The project was appraised by the World Bank following a request by the GoM and its main aim was to assist the GoM to:- (i) resettle the population that was displaced during the civil war; (ii) revamp irrigated agriculture production, (iii) restore tourism in resort places that were affected by the Civil War; and (iv) operationalize the industries, which were rehabilitated after the Civil War mainly in the Maputo and Gaza Provinces.

 

The main components of the project comprised mainly of expansion and reinforcement of transmission and distribution networks. At completion the project exceeded it targets by 53% and provided grid power to 10 new towns; reinforced the grid supply in 10 towns in Maputo and Gaza Provinces; provided power to 4,600 consumers (households, small businesses and industries, and irrigated agriculture). Though the project was completed behind time it was done 88% under budget. The project impacted positively on women and children through improved business prospects in the areas where it was implemented.

 

Contents
  1. Objective
  2. Target Group
  3. Output
  4. Key Features of the Case
  5. Sustainable Financing
  6. Supportive Policies and Institutional Environment
  7. Building Local Capacity and Skills
  8. Community Participation and Including Local Stakeholders
  9. Achieving Co-Benefits
  10. Affordability and Technical Issues
  11. Local Champions
  12. Monitoring and Evaluation
  13. Replicability and Scaling-up
  14. Contact
  15. References and Further Reading

 

Objective


The main objective of the project was the provision of reliable electric power to serve primarily as a catalyst for the resettlement of the displaced persons from the prolonged civil wars.

 

Target Group


The project targeted communities, households, businesses in the North, West and South of Mozambique.

 


Output


The project resulted in the construction and implementation of the following out comes.

    • Construction of 88km of 66 kV Lines
    • Construction 4 Substations (110 and 66 kV)
    • 398km of 33kV Distribution Network
    • Construction of 223 km of Low Voltage lines
    • Grid extension to 20 towns and villages
    • 4600 new connections

 

Key Features of the Case


Key features of the project included:-

  1. Project Planning;

The project was formulated following a survey in the targeted area. This meant that the project design was so as to directly address the needs of the targeted areas.

  1. Assistance in resettlement of the population displaced during the Civil War;

The project did not only address electricity access in the specific target areas, but also addressed the need for resettlement, which was necessary after the civil war that rocked Mozambique.

  1. Restoration of power supply in the industries that were rehabilitated after the end of Civil War;

Prior to this project, industries in the area were rehabilitated through a separate project and this project was meant to build on the outputs of the refurbishment exercise. In a way the refurbishment exercise established the market for the electricity first so as to ensure the financial sustainability of the electrification exercise.

  1. Investment promotion in the agriculture and tourism sectors;

As a result of the electrification project, the areas experienced a boom in business most specifically in agriculture and tourism.

  1. Restructuring of the Electricity Sector

The electricity sector was also restructured to open it up to independent players. EdM was also restructured to improve service delivery and profitability. An Energy fund was also established to finance low cost energy systems for low income groups.

 

Sustainable Financing


The main financial sustainability objective of the project aimed at improving the financial viability of EdM. Under the loan terms, EdM had to reduce total grid power losses from 40% to 29%, reduce the number of staff from 2,917 to 2,625, improve the load factor from 64% to 71%, adjust the average tariff to the rate recommended by a tariff study and reduce the average collection period (ACP) to 60 days.

 

EdM successfully reduced power losses and improved the load factor. However, upon completion of the project, EDM requested for the extension for the tariff improvement and was not able to improve the ACP. The tariff increased at a rate of 13% per year during the project duration and consequently EdM's revenue grew at an average annual rate of 21%. The increase in revenue was also due in part to increased sales resulting from the new connections. In spite of the tariff adjustments, EdM continued to register operational losses for the first half of the project duration and only started making profits during the last half.

 

An Energy Fund (FUNAE) for mobilisation of resources and implementation of various low cost energy supply schemes to low-income groups in rural and urban areas was also established under the Ministry of Mineral Resources and Energy (MIREME). The fund has been in operation for 15years now since its conception and formation in 1997. To date iFUNAE is financing solar, biomass and mini-hydro projects.

 

Supportive Policies and Institutional Environment


The major supportive policies that where put in place to support the project were the establishment of FUNAE and the enactment of the Electricity Act to open up the sector to other private operators. A private transmission company (MOTRACO) was established to supply the Mozal Aluminum Smelter as a result of the Act. The Act also created the National Electricity Council (CNELEC) as an advisory body to GoM, with quasi-regulatory functions in terms of dispute resolution and protection of consumer interests. It was envisaged that CNELEC would transform itself into independent regulator overtime.

 

In terms of institutional arrangements, EdM, was restructured into 7 support units and 7 business centers in line with its basic business activities i.e., generation, transmission, distribution, and commercial/customer services. This was meant to enable EdM to cope with changes in the electricity subsector and to improve service delivery.

 

Building Local Capacity and Skills


Local capacity and skills development was mostly targeted at the utility level and none at community level. The aim was to improve staff efficiency and therefore the project resulted in the reduction of the work force from 2895 staff to 2756 mostly through the elimination of ghost workers and the unskilled work force. The customer to staff ratio improved from 57 at appraisal to 92, which was still below the international standards (i.e. 150-250). At project appraisal, there were 6 expatriates (i.e. five engineers and one computer experts) due to local skills shortage. At the end of the project these were all replaced by local staff.

 

Community Participation and Including Local Stakeholders


Prior to the implementation of the project, EdM conducted a survey of the targeted areas, which culminated in the development of the electrification plan with local stakeholder input. One key outcome of the survey is that the project improved the quality of life of the population in the area because it addressed the needs of the communities where it was implemented.

 

For example, the overall productivity of women engaged in the processing and selling of fish and agricultural goods was improved and the project stimulated other economic activities. Prior to the implementation of the project, women, who dried fish using fuel wood and charcoal to preserve them, had to switch to electricity thus reducing the time spent in fetching of wood over long distances. This also solved the problem of indoor air pollution, which was associated with the use of fuelwood and charcoal, which problem tended to affect mostly women and children in the project areas. In addition, some of the women opened small-scale businesses because of affordable connection fees and the social tariff.

 

Achieving Co-Benefits


The project assisted the GoM to resettle the population displaced during the Civil War and increased access to electricity and contributed towards creating increased economic activities in the rural and peri-urban centers in Maputo and Gaza Provinces.

 

The project provided power to 4,600 consumers including households, small businesses and industries, and irrigated agriculture, 53% more than planned at appraisal. The project also provided power to major industries including Incamati and Maraga sugar industries, the Palmeira Rice factory, a limestone quarry at Salamanga and 11 touristic/resort centers.

 

In particular, many guest lodges were connected to the grid, which include lodges at Ponta de Ouro, Pona Malongane, Mecaneta, Bilene, Limpopo Valley, Chidenguele and Inhaca. As a result the tourism industry in the project area recorded a boom in business, particularly, in areas along the coastal front, generating employment for local residents and foreign currency to the country.

 

In addition, there was a proliferation of the informal sector and small, medium and large enterprises throughout the project area. The establishment of streetlights in some of the project areas also stimulated nighttime economic activities in the towns.

 

Affordability and Technical Issues


Electricity connection was made affordable due to a social tariff offered by EdM. This made it possible for poor households to connect to the grid and gain access to electricity. The project has resulted in the formation of business and job creation opportunities and therefore empowered customers to be able to pay for electricity.

 

Local Champions


The project was solely championed by the EdM from start to finish. EdM established a Project Implementation (PIU), which was assisted by an Engineering Consultant, comprising a Project Coordinator, two Distribution/Transmission Engineers and a Project Accountant. The Engineering Consultant was responsible for the preparation of detailed engineering design and tender documents, and project implementation supervision. The performance of the PIU was however rated as satisfactory and it was noted that the country did not have the capacity to properly manage similar projects. The bank therefore recommended further capacity building in project management.

 

Monitoring and Evaluation


EdM did not have an appropriate monitoring and evaluation (M&E) framework for the project. The M&E framework was meant to ensure the fulfillment of the loan conditions and monitor the overall project implementation.

 

Replicability and Scaling-up


N/A

 

Contact


 

References and Further Reading


1. Project Completion Report Electricity Ii Project Mozambique, African Development Fund, September 2005

2. Project Performance Evaluation Report (PPER)

3. Country Assistance Strategy

4. World Bank Policies & Guidelines

5. http://www.edm.co.mz/

6. http://www.funae.co.mz/

7. http://www.cnelec.org.mz/

8. http://www.rerasadc.com/about.cfm?members

Name:

Mozambique Electrification Project Phase II

Country:

Mozambique

Location:

Print

Implementer:

This project was implemented by the Electricidade de Mozambique (EdM). EdM is a State-Owned electricity company, which was set up in 1977. The company is concerned with the generating, transmission and distribution of Electricity in Mozambique. In 1995 the company was restructured with a view to improving the service delivery to its customer with efficient use of electricity.

Contact:

Technology:

Grid Electricity

Energy resource:

  • Energy Efficiency
  • Hydro

Sub type:

    Sector:

    • Agriculture
    • Energy supply
    • Energy consumption
    • Household
    • Commercial

    Service:

    • Electricity
    • Heating
    • Lighting
    • Productive uses

    Grid:

    • National Grid

    Targeted area:

    • Urban
    • Peri-urban

    Geographical scope:

    National

    Project status:

    Completed project

    Project start:

    1997

    End date:

    2003

    Implementing approach:

    Public

    Funding Type:

    • Loan
    • Equity investment

    Budget (Euro):

    >100,000