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The new regulation of access to off-grid areas: An economic opportunity and a contribution to the universal access to energy in Mozambique goal
25 of February 2022
The new regulation of access to off-grid areas: An economic opportunity and a contribution to the universal access to energy in Mozambique goal
Guilherme Daniel - Advogado

The Decree No. 93/2022 of December 10th, which approves the Regulation on Access to Energy in off-grid Areas (hereinafter, the "Regulation") entered into force on January 24, 2022.

 

As regards off-grid projects and until the regulation was approved, the regulatory framework and financial support mechanisms in Mozambique were substantially limited and access  to off-grid activities  was based on procedures and requirements for electricity supply projects  in general,  always on the basis of the PPP Law and the Electricity Law.

 

The general regime, clearly insufficient, did not take care of essential aspects to the feasibility of mini-grid projects, with emphasis on the regime of interconnection to the National Electricity Grid and tariff regime, thus making it impractical to implement and finance any mini-grid projects. 

 

Although it lacks relatively dense subsidiary regulation and on central aspects, the Regulation establishes a set of principles and standards that point very clearly to the solutions that the Government has decided to adopt. This is all in order to make mini-grid projects an effective and attractive solution, in particular private investment. Consequently,  in another important solution to meet the challenge of electrification in Mozambique, aiming at universal access to electricity and the economic development of populations.

 

Regarding the attribution of concessions, and even accepting, exceptionally and fulfilled the requirements provided for therein, the Regulation establishes the call for tenders as a rule, thus putting the keynote to transparency and competition.

 

Among the main news we highlight the reception of a set of principles that point to the possibility of a tariff closer to a cost-reflective tariff calculated based on the accepted costs and income allowed including an adequate remuneration of the invested capital. We also highlight the provision of a set of alternatives for the connection of the mini-grids to REN that allow an effective protection of investments.

 

The analysis of the adequacy or not of the proposed solutions is conditional on the specific regimes that will be subject to supplementary regulations.

 

In addition to the supplementary regulations, it seems crucial that, in compliance with Article 3 of the decree approving the Regulation, the Council of Ministers approves as soon as possible the Electricity Plan for Off-grid Zones and its definition of the areas that will be granted for mini-grids, thus accelerating the promotion of public and/or private initiative projects.

 

The Energy Regulatory Authority – ARENE has also an essential role, and will increasingly function as a single point of connection between the promoter and the State in the process of granting and implementing a mini-grid project, concentrating these competencies on a single entity, without prejudice to the usual electrical and environmental licensing with other entities.

 

At the same time, the Regulation also regulates the provision of energy services, thus providing for the need for certification of equipment and registration of the entities providing such services, which constitutes an essential improvement from the point of view of consumers, especially regarding quality control and equipment prices.

 

We mark and recognize the transparent, inclusive and swift way how ARENE, with the support of the BRILHO programme, conducted the whole process that led to the adoption of the Regulation, with great openness to the adoption, discussion and reception of proposals. In this respect, ALER and AMER played a role in coordinating and collecting contributions from their members, both during the period of public consultation of the diploma, and later in the organisation of work sessions to disseminate the Regulation, with emphasis on  the webinar  that took  place on last February 24th with a debate between the public and private sector with a view to clarifying the opportunities and possible issues raised by the  Regulation.

 

In this context, the VdA/GDA participated in the legal analysis of the Regulation, in particular by presenting the diploma to the private sector, indicating its opportunities and the way to go.

 

Following this, we believe that the Regulation is an essential first step towards access to economic activities in off-grid areas, emerging as a unique opportunity for investment and promotion of these activities, while contributing to universal access to electricity.

 

Guilherme Daniel

Lawyer - Guilherme Daniel Advogados Moçambique