Supporting the Policy Enabling Environment for Development

Energy Regulator - ARENE

Creating and maintaining an effective enabling environment that promotes new investment into the power sector in Mozambique requires a strong and transparent regulatory framework that facilitates both private and public investment.  Central to the regulatory framework is an independent Electricity Regulator.  An independent sector regulator can strengthen the performance of the energy sector in Mozambique and establish a policy and institutional foundation that would preserve the options for later sector reforms. A sector regulator with clear mandates would also be a source of sector stability that will serve well the requirements necessary to attract investor commitment of capital over time. A strong regulator can help ensure service expansion, service quality, and reliability of electricity.

Earlier this year the Mozambican parliament approved a bill establishing the Energy Regulatory Authority (ARENE) to replace the National Electricity Council (CNELEC) which had served as an advisory board only.  The USAID SPEED Project provided recommendations that were incorporated into the Law that helped improve the law. ARENE will approve electricity tariffs as well as propose new policies and legislation on energy matters. It is expected to promote competition in energy services. As a new regulatory institution, ARENE has considerable potential but would benefit from assistance in helping it to establish itself and train its staff in their new role. USAID SPEED will provide technical assistance to ARENE to meet its mandate and create a strong energy sector in Mozambique.

SPEED+ has and will continue to coordinate with other donors to assure synergy in assistance to ARENE. Specifically, SPEED+ will work to:

SPEED+ has provided preliminary assistance in organizational capacity building such as the organizational structuring and position descriptions. ARENE needs to: (a) be autonomous, (b) have clear authority and capacity to fulfill its mandate, and (c) is held accountable for its decisions and actions. ARENE should also establish and maintain clear relationships and lines of accountability between key power sector institutions, including MIREME, other relevant Ministries and EDM. SPEED+ will continue to provide support to ARENE to be function as an independent regulator, such as developing guidelines and principles for decision-making processes at ARENE, providing justification for ARENE to secure adequate funding from the State budget to ensure that the regulator can supplement staff capabilities with capable experts, developing job, and setting procedures to deal with (service providers or consumers) appeals.

A strong and capacitated ARENE with broad authority over the electric industry will help instill confidence by investors and electric service providers or independent power producers to enter and do business in Mozambique. A neutral entity that will make decisions based on the public interest and on internationally accepted and transparent technical requirements will ensure a level playing field and fair and reasonable opportunities to do business. If there is a perception that the market structure does not provide these necessary ingredients, then the cost to enter and the barriers that may have to be overcome may be viewed as too great and the investors will go elsewhere.  SPEED+ will work with ARENE to build the capacity to set key energy sector regulatory aspects such as pricing, land rights, offtake arrangements, and performance standards - which can reduce investor risk while contributing to other public policy objectives such as environmental protection and universal access. We will consider sending a few key commissioners from ARENE to a course on Managing Power Sector Reform and Regulationat the University of Cape Town in October 2017.  The assistance will be temporary and meant to fill the gap while other donors, such as Norway, develop and set their technical assistance programs to ARENE.  

SPEED+ will consider the possibility of providing an embedded advisor to help ARENE become operational and high-level guidance based on international best practices and support, along with STTA, activities 3.3.1(a)(b). The Adviser will support ARENE on legal, economic, institutional strengthening and communications matters, including creating an informative website.