Due to poor planning, decades of under-investment and deteriorating infrastructure, the provision of electricity in Mozambique has been deficient. However, outstanding economic growth and the government rural electrification programme are galvanizing the electricity industry in the country.

New analysis from Frost & Sullivan, Strategic Analysis of the Mozambican Electricity Industry, finds that the industry earned revenues of $202.0 million in 2008 and is estimated to reach $455.50 million in 2015.

"Major investments in electricity projects in Mozambique have the potential to add 9,000 MW of electricity to the Southern African power pool," noted Frost & Sullivan Industry Analyst Jeannot Boussougouth. "Despite the global financial crisis, the demand for electricity is forecast to grow by 11 percent until 2015 as a result of a boom in the agriculture and manufacturing sectors, as well as a strong rural electrification programme."

Mozambique is rich in energy resources, but has lacked the financial and human resources to develop its electricity industry. It is, however, now government policy to develop the potential of the electricity industry in order to increase the access to electricity, while enhancing the environmental sustainability of electricity generation.

"Accordingly, the Mozambican electricity industry is expected to grow by 15.0 per cent by 2015," says Boussougouth. "The country's outstanding economic growth has provided it with credibility, attracting more foreign direct investment."

However, theft and vandalism of electrical equipment pose a major threat to industry prospects. In addition, the high level of capital required to build a power plant is a significant hurdle to industry growth.

"The poor state of infrastructure and low tariffs are the main factors hampering the growth of the Mozambican electricity industry," remarks Assis. "Moreover, the country has an acute shortage of skilled labour, forcing the Mozambican government to import part of its manpower from Portugal, Brazil, Switzerland and South Africa."

There are other key challenges, such as sub-economic tariffs that are likely to retard the growth of the electricity industry over the next two to five years.

"Promisingly, the Mozambican government is anticipated to invest about $700 million in an effort to expand its grid to the entire country by 2020," says Boussougouth. "Such trends will positively impact market expansion."