Namburete.Apresentacao de Oslo Fevereiro12022007ministroFinal.ppt

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THE ENERGY SECTOR IN
SUB-SAHARAN AFRICA (SSA)
By
H.E. Dr. Salvador Namburete
Minister of Energy
Mozambique
Oslo, Norway, 13th February 2007

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1. Introduction
2. Institutional framework in Africa
3. Regional and bilateral cooperation
4. Recent developments
5. The SADC Region context
6. The energy potential in Mozambique
7. The private sector participation
8. Conclusion
CONTENTS

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1. INTRODUCTION
 Comprises the whole Continent,
except six countries in the north;
SAA attaches great importance to
access to various forms of modern
energy;
A shocking fact: SSA countries
spend 12% on energy, while
developed countries spend only
2%!
Increasing supply in itself does
not meet poverty
alleviation/eradication and
development challenges! Price
affordability is critical!
Sub-Saharan Africa (SSA)

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2. INTRODUCTION ( Continued.)
 Despite the abundance of energy
resources:
 With the exception of South
Africa, Mauritius and the
Seychelles), only 20-30% of urban
population and 5-10% of rural
population have access to
electricity in SSA;
The remainder relies on
woodfuels, which promotes
deforestation and desertification, in
addition to the negative impact on
people’s health (inhalation of
smokes and fumes) and the
environment (air pollution).

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3. INSTITUTIONAL FRAMEWORK IN AFRICA
 The need to cope with radical changes on the international energy front has led to:
The evolution of institutions, policies and practices to overcome global energy
crises and their long-term negative impacts on economic growth and social
development, especially of the poorest among the poor;
 The need to overcome the national and international policy coordination problems,
jurisdictional arguments and conflicts of interest that the prevailing fragmented
approach to the energy factor has caused;
The gradual engagement of multilateral cooperation institutions and mechanisms,
entrusted with the vital role of promoting the development of the energy sector;
The rapid establishment of African cooperation institutions, with the view to jointly
promote sustainable economic and social, development. These are:
 The African Union (AU)
 African Energy Commission (AFREC)
 New Partnership for Africa Development (NEPAD)
 Forum of Energy Ministers of Africa (FEMA).

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4. REGIONAL AND BILATERAL COOPERATION
 High degree of regional energy integration and co-operation is critical to ensure:
 Collective energy supply security;
 Regional competitiveness;
 Effective environmental protection.
 The policy measures needed:
AU, AFREC and FEMA should promote Africa’s political stability, secure high
country credit rating, and improved energy sector governance;
Enhancement of regional electricity exchange through bilateral cooperation and
the development of regional power pools, such as: SAPP in Southern Africa,
EAPP in East Africa, and WAPP in West Africa;
Promotion of access to cheaper finished petroleum products (LPG, kerosene,
gasoline, diesel), especially in land-locked countries;
Facilitate system interconnection for petroleum products, and encourage the
construction and use of regional and sub-regional storage and transportation
facilities to ensure investments, job creation and income generation.

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5. RECENT DEVELOPMENTS
 The Oil Sector:
 Promotion of investments in the downstream industry (refining,
distribution and marketing) to increase the availability of refined
products and reduction of consumers price;
 Petroleum products represent approximately 70% of sub-Saharan
Africa’s total commercial energy and can account for up to 33% of
foreign exchange earnings;
 In Southern Africa, the Mozambique-South Africa 800 km gas
pipeline has been developed and is currently in operation;
 The West Africa Gas Pipeline (WAGP) to supply Benin, Ghana and
Togo with Nigerian gas is underway;
 Studies on Kudu gas in Namibia for power generation are underway;

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6. RECENT DEVELOPMENTS
 The Power Sector
 East African Power Pool (EAPP) plans to interconnect the grids of
Kenya, Uganda and Tanzania, as well as the SAPP grid;
A feasibility study for building a transmission line inter-connecting
Mozambique and Tanzania is under preparation;
The West African Power Pool plans to interconnect the
utilities of Cote d’Ivoire, Nigeria, Benin, Togo and Mali.

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DR Congo
Tanzania
Zambia
Angola Malawi
Zimbabwe
Mozambique
Botswana
Namibia
South Africa
Lesotho
Swaziland
Southern Africa Development Community (SADC)
established the Southern African Power Pool (SAPP) in 1995;
The goals: i) use synergies to maximize the regional
resources for the consumers while preserving the
environment; ii) adopt sound economic, social and
environmental practices conducive of a competitive regional
market to attract power intensive investments, and ensure a
sustainable energy development;
SAPP first region outside Europe and North America to
arrange a power pool for coordinated trading and investment
in utility expansion.
Population: 235
million
7. THE SADC REGION CONTEXT

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Quantidade (TJ)
Carvão
Mineral,
68,100,571
Gás Natural,
5,334,000 Hidro, 275,940
Total:
74 millions TJ
COAL: 2,400 millions tonnes
Gás: 127,000 millions m3
HYDRO: 12,500 MW
8. MOZAMBIQUE: THE ENERGY POTENTIAL
COAL
HYDRO
NATURAL GÁS

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8. MOZAMBIQUE: THE ENERGY POTENTIAL (Continued)
Power Generation

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Moatize 1500 MW
[1,900 MUSD]
Mphanda Nkuwa 1300 MW
[1,900 MUSD]
Temane 750 MW
[600 MUSD]
Mavuzi & Chicamba* 92 MW
[38 MSD]
Lúrio 183 MW
[360 MUSD]
Cahora Bassa North
850 MW
[380 MUSD]
8. MOZAMBIQUE: THE ENERGY POTENTIAL (Continued)
Power Projects With Feasibility Studies

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8. MOZAMBIQUE: THE ENERGY POTENTIAL
OIL AND GAS SECTOR – UPSTREAM
 Oil and Gas Exploration
 Rovuma Block ( 2005-2006: Under Licensing Round);
 Exploration Production Contracts (EPCs) for Concession Areas 1 and 4 signed
December 2006 with Anardarko (USA) and ENI (Italy);
 EPC with Norsk Hydro for Concession Areas 2 & 5 signed mid 2006;
 EPCs for Zambezi onshore, M-10 and Sofala Blocks signed November 2006
with BANG (USA);
 Inhaminga Block (Sofala) concessioned to DNO (Norway);
 Zambezi Offshore Block (Zambezi Delta) concessioned to Petronas (Malaysia),
ENH, Petrobras (Brasil) and PetroSa (SA);
 Pande/Temane and Blocks 16 & 19 concessioned to Sasol and ENH;
 Buzi Block and other onshore and offshore Blocks are free.

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8. MOZAMBIQUE: THE ENERGY POTENTIAL (Continued)
OIL AND GAS SECTOR - UPSTREAM
 Natural Gas Discoveries and Reserves (GIIP,
Bscf)
a. 1st discovery in 1961: Pande (G-6)-----3,470.7;
b. 2nd discovery 1962: Buzi ..G-9 (Bcm)------ 1.5;
c. 3rd discovery 1967: Temane-G-6+8 ----- 89.03;
d. 4th discovery 2003: Temane East: G-6+East ------
-------------------------------------------------- 1,338.6;
e. 5th discovery 2003: Inhassoro: G-6----- 379.31;
 Condensate Reserves:
 Proven reserves: 292,406.6 bbls + additional
1,175,792 bbls from the gas bearing zones;
 Most likely (probable) reserves:1,278,488
bbls + additional 2,543,956 bbls from the
gas bearing zones.
Offshore
Area

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8. MOZAMBIQUE: THE ENERGY POTENTIAL (Continued): The Temane-Secunda Pipeline

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8. MOZAMBIQUE: THE ENERGY POTENTIAL (Continued)
OIL AND GAS SECTOR - DOWNSTREAM
 Petroleum Products Distribution/Commercialisation
 Around 700 000 m3 of petroleum products per annum, through
international tendering process;
 12 Oil Companies operating in the distribution of petroleum products of
which only one is national (PETROMOC);
 Need to improve distribution infrastructure;
 Need for construction of LPG terminal and storage facilities; and
 Need for construction of an oil refinery

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8. MOZAMBIQUE: THE ENERGY POTENTIAL (Continued)
RENEWABLE ENERGY POTENTIAL
BIO-FUELS
 In Mozambique we have decided to embark on a modern bio-fuels
programme based upon the potential benefits of these systems such as: i)
They can be used to substitute conventional forms of energy with no or
minimal adaptation; ii) They are labour intensive, and can create
agricultural and agro-industrial employment, self-employment, and income;
iii) Mozambique has 36,000,000 ha of arable land, of which only 9% is
under cultivation, abundant labour and water with which to produce bio-
fuels namely, bi-oethanol (sugar cane, and sweet sorghum) and biodiesel
(copra oil, cotton seed oil, sunflower seed oil and jatropha curcas seed oil)
without threatening food production and food security; iv) Potential markets
for surplus bio-fuels, in particular, bio-ethanol have been identified in a
number of countries, including in Europe.

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8. MOZAMBIQUE: THE ENERGY POTENTIAL (Continued)
HOW TO REALISE BIO-FUELS BENEFITS
 GoM has already adopted appropriate legislation for introducing biofuels;
 Engage the private sector and establish public-private partnership;
 Encourage cross-sectoral cooperation in Mozambique between ME,
MINAG, MCT, MIC, Universities, Banks, civil society, NGOs, among others;
an inter-institutional forum comprising most of these entities has been
established by the GoM under the coordination of the Minister of Energy;
 Cooperation with development partners to:
 Attract Investments;
 Develop the required legal and economic framework (an MOU with
Swedish entities has been signed and cooperation with the World Bank
in this regard is underway; a new trilateral initiative involving the UK,
Brazil and Mozambique is taking shape, and a series of meetings have
been planned for the coming days to develop this initiative; we have
offered to host the coordinating unit of this initiative at our Capital City of
Maputo;
 Deploy Kyoto Protocol mechanisms and other instruments in the bio-fuels
sector.

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8. MOZAMBIQUE: THE ENERGY POTENTIAL
PHOTOVOLTAIC SYSTEMS
 We are equally looking at electrification using alternative sources of energy,
in particular photo-voltaic solar systems;
 Two pilot projects have been successfully implemented, being one in the
South and one in the central region of our country;
 This has allowed the provision of electricity to schools, clinics and water
pumping systems in areas where the power from the national grid is not yet
available; these systems are currently being replicated throughout the
country in 300 rural schools and clinics during 2006;
 Because poverty has a face in Mozambique and that is the face of a
woman, the provision of water and power, and the electrification of schools
in isolated areas has a strong gender content: women and girls will now
save time from collecting water and firewood, and that time will be devoted
to other things such as taking better care of the family and going to classes
in the evening, which is in line with our approach to gender mainstreaming.

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9. MOZAMBIQUE: THE PRIVATE SECTOR PARTICIPATION IN ENERGY
 The energy sector is open for private sector participation;
 A significant number of private sector projects have been implemented, such as:
 The Temane natural gas project;
 The MOTRACO power transmission line;
 The northern Inhambane power system;
 The distribution of oil products in the country (currently 12 companies);
 The Mphanda Nkuwa Hidroelectric Project, the Moatize coal fired thermal
power plant, the thermal combined cycle natural gas fired power plant in
Temane, and many more, are in preparation and are open to private sector
participation;
 The legal and regulatory environment is favourable:
 The electricity Law (Law nº 21/97 and its regulation;
 The Petroleum Law and its regulation;
 The natural gas commercialization and distribution regulation;
 The CNELEC (electricity regulator) – under gradual implementation

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The success of the “energy factor” within the context of Sub-Saharan Africa
as measured against its effectiveness in addressing poverty, will depend on all
of us recognizing certain “economic facts of life”, among which tariffs to
minimize social inequities, minimum loss and wastage in delivery of energy
services and an internally generated re-investment in technological upgrading
and capacity creation for the poor;
The energy factor in poverty alleviation implies a focus on sustainability of
energy systems and the ability to provide energy services that can support the
achievement of socio-economic and environmental goals;
The issue of price affordability: Sub-Saharan African governments do their
utmost to take electricity where they believe it is needed. But very often an
attempt to solve the of lack of access to electricity in a certain region have
perverse results, when people know that there is electricity in their town or
village but they cannot afford to pay for its use!
This renders the situation worse than when there is no electricity at all. So,
the challenge is how to expand the provision of electricity services at affordable
prices!
10. CONCLUSION

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10. CONCLUSION (Continued)
 The region needs substantial investment in the power sector both in
generation and transmission;
 The regional market, both bilateral and short term, are favourable for new
power development, including the expansion of SAPP grid;
 Mozambique is geographically well located, for the exploitation of its energy
natural resources potential, attractive investment laws and climate and
therefore offers a great opportunity for the investor community (individually,
or in partnership);
 There is a call for an imperative to urgently focus on capacity building for
public and private institutions involved in energy sector decision making and
influence;
 A number of private sector projects are already underway and a few others
have just been approved. A range of projects of all sizes where the private
sector is invited to participate.

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10. CONCLUSION (Continued)
We strongly believe that efficiently used energy has a very important
role to play in the fight against poverty. Our vision is based upon three
major pillars, namely:
i. Development of Basic Infrastructure for public supply of energy, such as
rural schools and clinics, water supply systems, among others. The level
of access to electricity is among the lowest (9.0%, in 2006). We plan to
achieve 15-20% over the next 10 years, which is still not enough.
We have been able to rebuild all the transmission infrastructures
destroyed during the destabilization war, which enabled us to expand our
transmission grid from about 300km at the time of our independence in
1975 to more than 5,000km today.
We have been able to complete in July 2005 the interconnection of our
10 provincial capitals on the basis of our Electricity Master Plan, which
was adopted in 2004.

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10. CONCLUSION (Continued)
Our concentration now is on rural electrification, with a view to
providing the power that is necessary to unlock the country’s
enormous potential in agriculture and tourism, through the
connection to the national grid (RNT);
ii. Promotion of Productive Use of energy for income generation,
particularly in rural areas through the generation of employment,
including self-employment, in agriculture, agro-processing of fruits and
vegetables in micro, small and medium-sized businesses;
iii. Development of electricity-intensive mega-projects as anchor projects to
attract other industrial activities for economic and social advancement.

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10. CONCLUSION (Continued)
The Mozambique hydropower projects are the most competitive
in the SADC region;
 Mozambique plays a vital role for energy solution in the SADC
region;
The potential for large scale bio-fuel production in Mozambique
is enormous and needs to be exploited. The experience so far is
very encouraging.
The Government of Mozambique is strongly committed to the
success of this programme at the highest political leadership
(HE President Guebuza is leading personally the national
campaign for the cultivation of jatropha curcas in the country);

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10. CONCLUSION (Continued)
 Macro-economic and political stability prevails and is strengthening;
 Mozambique and Norway enjoy excellent cooperation relationship that form
the basis for the development of economic cooperation including the
participation of private sector.
 Large and fast growing regional markets for liquid fuels, including bio-fuels;
 The country also offers excellent conditions for leisure, including our natural
hospitality, gastronomy, beaches and safaris for you to enjoy in between
your business activities;
 We, therefore, would like to reiterate our invitation to all of you to come and
join hands with us in our efforts to eradicate absolute poverty while you
make money through the production of bio-fuels, prospecting and
exploration oil and natural gas, and investing in power projects for the
benefits of the all region.

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Thank YOU!
Ministry of Energy
Address: Av. 25 de Setembro 1218, P.O.Box 1381
Maputo, Mozambique
Phone:+258 21 303 265
Fax.:+258 21 313 971
E-mail: snn@me.gov.mz
snamburete@yahoo.com