Outlook Of Mozambique Power Sector Nordic Business Breakfast 10th December 2014

Table of Content Macro economic indicators Electricity Sector Industry Present and future challenges Natural Energy Resources Generation Expansion Plan Conclusion

MOZAMBIQUE Population: 23.760 mil GDP (Nominal): USD 15.355 billion Per capita: USD 630 GDP Growth Rate : 7.5% (2013) Exchange Rate USD/MT: 30.50

MACRO-ECONOMIC INDICATORS INTERNATIONAL CONTEXT 2010 2011 2012 2013 World Economy GDP growth Rate (%) 5.3 3.8 3.3 3.0 Euro Zone 1.9 2.0 -0.7 -0.4 Asia (China e Índia) 9.5 7.8 6.7 6.5 Sub-Saharan Africa 5.7 5.2 4.5 5.1 Mozambique 7.1 7.3 7.5 World Inflation Rate (%) 3.7 4.8 4.0 1.6 2.7 2.5 1.5 9.3 9.0 6.9 12.7 10.4 2.1 4.2

10 MAIN FDI SOURCES IN 2013

Table of Content Macro economic indicators Electricity Sector Industry Present and future challenges Natural Energy Resources Generation Expansion Plan Conclusion

Energy Outlook for Mozambique Electricity Supply Industry Electricidade de Moçambique (EDM): The national power utility wholly owned by the state responsible for the generation, transmission, distribution and commercialization of electricity throughout the country. Hidroeléctrica de Cahora Bassa (HCB): Owned by Moçambique Government (92,5%) and REN / Portugal (7,5%) is the Independent Power Producer (IPP) responsible for the generation of electricity in Cahora Bassa (2075 MW) Mozambique Transmission Company (MOTRACO): Independent Transmission Company (ITC), Owned 33.3% by EDM, 33.3% ESKOM and 33.3% SEB with the responsibility to supply electricity to MOZAL and wheel power to EDM and SEB of Swaziland

Outlook Of Mozambique Power Sector electrification and coverage 1977 2004 2006 2007 15 Districts Electrified 15 Districts Electrified 2008 2009 2010 2014 121 Districts Electrified

Outlook Of Mozambique Power Sector Access to electricity – on grid

Outlook Of Mozambique Power Sector Customer base and new connection Moçambique is after South Africa the highest new connection rate per Year in SADC with an average of 140 000 new connection in the last 3 years

Outlook Of Mozambique Power Sector Transmission National Grid Expansion Past Present Future 1977 2014 All capital provinces connected to the national Grid 2020 Novas centrais e linhas de transporte para responder a demanda Only 3 capital provinces connected to the national Grid

Outlook Of Mozambique Power Sector Historic power balance Cahora Bassa contributes with 94% of the power balance

Outlook Of Mozambique Power Sector National demand

Outlook Of Mozambique Power Sector regional demand Planned Capacity will exceed peak demand by 2016.

Table of Content Macro economic indicators Electricity Sector Industry Present and future challenges Natural Energy Resources Generation Expansion Plan Conclusion

Outlook Of Mozambique Power Sector EDM Organisation

Outlook Of Mozambique Power Sector The new paradigms…. Before Present & Future Ensure medium and long term energy needs and access to natural resources Competitiveness of the energy sector in the Country Promote private initiative Operational management efficiency Extend the access to electricity to the population Promote “cheap energy” for economic development Institutional development and regulation of the electricty sector Government and Regulator Finance de development of the electricity system in the Country Funding predominant under Concessional Scheme Regulated tariff system Economic and Financial viability on the investment (PPP) Cost reflective Tariff and or Cost recovery mechanism Governance, transparency, Donnors and Financiers Access to basic energy services and low tariffs Surplus capacity of infrastructure in transmission Excess of energia Availability / Service / Quality of Supply / Industrialization Transmission Capacity on the Limit / constrains Déficit of power and new generation plants Clients / market

Table of Content Macro economic indicators Electricity Sector Industry Present and future challenges Natural Energy Resources Generation Expansion Plan Conclusion

The Mozambique natural resources and the least cost options Mozambique Natural Resources: Hydro

Outlook Of Mozambique Power Sector Hydro natural resources Mozambique is the second country in Southern Africa with the biggest hydro potential The potential in Zambezi river is beyond 8 000 MW and only 2075 MW is in operation at Cahora Bassa South Bank The total unexplored hydro potential in Mozambique is close to 12 000 MW out of which in Tete province

Outlook Of Mozambique Power Sector Coal natural resources Mozambique Coal reserves are believed to be amongst the world’s largest , and a strong investment currently being made in the sector, particular in the Tete Province Moatize Coal basin poised to become the World’s newest major export coal basin 2 large scale projects already in mining activity (20 to 50 Mtpa) Additional large scale coal projects in exploration (Ncondezi, Jindal, Rio Tinto, Zambeze, Revuboe, etc..) Potential + 50 Mtpa of export coal by 2025 The coal proven reserves can produce more than 8 000 MW, base load power for 30 years

Outlook Of Mozambique Power Sector gás natural resources The only gas fields currently in production in the country are located in Temane, in Inhambane province The gas is exported and transported by pipeline to South Africa by SASOL, a South Africa Company 27 MGJ are allocated for power generation > 100 MGJ is for export to South Africa Currently, EDM, SASOL, Investec, Aggreko, Gigawatt and MGC are developing generation power projects Around 350 MW will be Installed until 2016 in Ressano Garcia (Border with South Africa)

Outlook Of Mozambique Power Sector Gás natural resources 2011 and the first months of 2012 saw the announcement of successive large finds of natural gas in Mozambique offshore. Such potential of natural gas identified is corresponding to 150 to 200 trillion cubit feet. The size of the natural gas finds in the Rovuma basin could turn Mozambique into Africa’s second large exporter of natural gas in 2019/20 Medium and large scale power generation plant could be installed in the north of Mozambique (> 2000 MW) Possibility of large scale development of a liquefied natural gas (LNG) project

Table of Content Macro economic indicators Electricity Sector Industry Present and future challenges Natural Energy Resources Generation Expansion Plan Conclusion

Outlook Of Mozambique Power Sector regulatory framework EDM created in 1977 with monopoly for GX, TX & DX (except for HCB) Law for Public Enterprise approved in 1991 (Lei Nº. 17/91) EDM transformed into a Public Enterprise in 1995 Electricity Act approved in 1997 (Lei Nº. 21/97) Electricity Regulation Decree approved in 2000 (Decreto 08/2000) Tariff System Decree 29/2003 EDM designated Manager of the National Transmission Grid and System Operator in 2005 (43/2005) Private Partnership Law for Infrastructure (Decree nº 15/2011)

Outlook Of Mozambique Power Sector comparative advantages Natural Resources Proven Gas reserves Proven Coal Reserves Proven firm Hydro Renewable Reserves Financing Corporate balance Possible to refinance after COD Hydro Base No FSA Long Term PPA Thermo Base (Coal) Coal as a waste product from mining

Generation Expansion Plan 2012 - 2020 Cahora Bassa Norte (1245MW) Ncondezi (300 MW) Benga (300 MW) Palma (ENI) (75 MW) Cahora Bassa Norte (1245MW) Lúrio (120 MW) Alto-Malema (60 MW) Mphanda Nkuwa (1500 MW) Boroma (200 MW) Moatize (300 MW) Mavuzi 2 & 3 (60 MW) Lupata (600 MW) Massingir (25 MW) Temane (400 MW) Kuvaninga (40 MW) 2012 - 2014 Gigawatt (100 MW) 2015 - 2017 CTRG (175 MW) 2018 - 2020 > 2020 ELECTROTEC (30 MW) Aggreko (222 MW) CTM (100 MW)

Power Balance and energy Mix

Power Balance and energy Mix (Short and Medium term)

Power Balance and energy Mix (Medium and long term)

Power Balance and energy Mix (Medium and long term) Until 2020 Gás will contribute with 42% of energy

Road map of EDM equity financial participation

Project development tracking matrix

Table of Content Macro economic indicators Electricity Sector Industry Present and future challenges Natural Energy Resources Generation Expansion Plan Conclusion

Outlook Of Mozambique Power Sector conclusions The Electricity Sector will required more than 3 bUSD in the next 5 years to sustain energy demands Concessional, Commercial and Private equity funding will be required GoM will play a determinant role to Develop the ESI, including but not limited to project promotion There is in place adequate regulatory framework and conducive for Independent Power Producers of electricity (IPPs) Gás will be a Game changer on ESI and determinant for Gás to Power initiatives EDM is going to a process of complex initiatives that needs special kills, competence and good Governance Cost reflective tariffs will be fundamental to sustain the Investment required

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