Sofala Province: Green Energy Revolution &  Regional Power Ambitions

The Government of Mozambique has strategically designated the energy sector as a top priority for national development, recognizing its vital role in fostering economic growth, reducing poverty, and industrial modernization. Sofala Province, traditionally known as a logistical and agricultural hub, is rapidly emerging as a centerpiece in this national energy transformation, driven by massive investments in renewable and industrial capacity.

Facts and Figures: Sofala's Energy Profile

Mozambique possesses an enormous capacity for power generation (estimated at 187 GW from various sources including hydro, gas, coal, solar, and wind). However, the country still faces significant energy access challenges, with the index of access to electricity being the lowest in the region, though the national electrification rate has been steadily increasing.

National Access Rate - Only about 44% (or 48% by 2022, or 40%) of the population has access to electricity, mainly concentrated in urban areas.

National Energy Consumption - 80% of Mozambican households still rely on traditional biomass (wood and charcoal) for energy.

Provincial Investment Focus - Sofala Province has received more than 88% of total investment in recent energy project approvals, signaling its emergence as a major hub.

Flagship Project - The Green Energy Mozambique Industrial Park in Sofala is a transformative US$3 billion investment.

Energy Resource Presence - Natural gas indications have been recorded in Sofala Province. Hydrocarbon exploration has taken place near the Inhaminga onshore block north of Beira and in an offshore block near the Zambezi Delta.

Rural Energy Funding - Sofala was one of five provinces to receive a US$148 million grant from international partners (World Bank, EU, Sweden, Norway) to improve energy access.

Government Policies and Frameworks

The Mozambican government is pursuing several measures to foster investment and expand energy access nationwide, directly impacting Sofala's prospects:

• Universal Access Commitment: The primary goal is to achieve universal access to electricity by 2030. This is implemented through the National Electrification Strategy (NES) and the Programa Nacional de Energia para Todos (Energy for All/ProEnergia). EDM (Electricidade de Moçambique) plans to connect 146,000 new consumers in provinces including Sofala.

• Sector Liberalization and Investment: The government aims to foster a strong private sector by ensuring a continued supply of energy and better transportation infrastructure. It has enacted a new Electricity Law that simplifies permitting and concession processes, particularly for off-grid power generation projects up to 10MW, encouraging private sector participation. The Ministry of Mineral Resources and Energy (MIREME) is responsible for this sector.

• Strategic Corridors: National development plans prioritize making the North-South Corridor a focal point for national development, featuring multisectoral and territorial links. The Beira Corridor, where Sofala is located, is crucial for integrating the region's energy and infrastructure assets.

• Energy Diversification: The government drafted a national policy for sustainable energy and continues to invest in electrification projects nationwide, particularly in rural areas. This strategy is guiding the transition away from heavy reliance on large hydro projects in the Zambezi Basin to a diversified mix incorporating gas, solar, and wind.

Key Challenges and Constraints

Despite the massive potential, investors and the public must navigate significant challenges:

1. Low Access and Rural/Urban Divide: Despite progress, the majority of the population (approximately 22 million) still lacks access to electricity. The gap between urban and rural electrification rates is stark.

2. Infrastructure and Grid Reliability: An underdeveloped transmission and distribution network restricts the reach of electricity access, keeping the on-grid electrification rate low. Investments are needed to extend the network and secure the connection of renewables into the transmission grid.

3. Reliance on Biomass: The pervasive use of wood biomass for cooking contributes significantly to deforestation and poses health challenges. Reducing this dependency requires prioritized domestic energy needs and sustainable solutions.

4. Institutional and Coordination Weaknesses: The state-owned utility, Electricidade de Moçambique (EDM), faces challenges in commercial and financial performance. While FUNAE is critical for rural projects, critics note concerns about its efficiency and effectiveness due to the lack of private sector or civil society representation on its Board. Furthermore, there is a lack of defined blueprints for the exploration of each energy source.

Systemic Risks for Investment

The energy sector in Sofala, and Mozambique generally, is exposed to several high-level risks:

• Climate Vulnerability (High Physical Risk): Sofala Province is geographically characterized by low-lying coastal and river areas, making it highly susceptible to tropical cyclones, floods, and storms. Catastrophic weather events (like Cyclone Idai) can severely damage energy and infrastructure assets, including roads and electricity systems.

• Political and Security Instability: Historically, Sofala has been a center of political tension and instability, which can restrict movement and compromise the security of development projects in the interior districts. Military conflicts in the central part of the country pose a risk to mineral supply chains.

• Policy and Regulatory Uncertainty: The overall investment climate in Mozambique is considered risky, with low rankings in international indexes. Issues include outdated and fragmented investment laws, and concerns regarding the predictability and enforceability of investor rights. Furthermore, implementing complex new laws, like the EIA Act (Decree 45/2004), is difficult due to limited human and financial resources, and inconsistencies across government ministries.