The Electricity Law
Power project proposals often fail to materialize due to weak legal or ambiguous frameworks vital to the long-term sustainability of the sector. The sector is governed through the 1997 Electricity Law, which defines the general policy for the organization of the power sector and the administration of the supply of electrical energy. The Act provides the legal framework for electrical energy generation, transmission, distribution and sales within Mozambique, as well as its exportation and importation, and the granting of concessions for these activities. It also provides for mandatory third party nondiscriminatory access to the transmission system, and permits cross-border electricity trade, subject to the approval of the Government. The Act is now 20 years old and needs to be updated.
At the same time, there is no adequate certainty in the right of independent generators to sell power to EdM, to corporate purchasers, or to retail customers. Nor is there certainty in the applicability of the PPP law for the tender of IPP (Independent Power Producer) projects. Such matters must be legally clarified to attract private enterprise and low-cost capital.
SPEED+ will provide legal support to clarify the legal framework for on-grid IPPs that are not covered by the REFIT (see below). The REFIT is intended to cover renewable energy sourced generation less than ten megawatts in size and less than ten kilometers from the grid. There are larger renewable projects, conventional projects and cogeneration projects for which the clarification of legal rights and procurement practices is needed in order to attract developers and lower cost capital into the sector.