The Law on ARENE
Mozambique is at a critical point in the development of its energy sector. Leaders today are making essential changes in many areas, including revising the mandate and improving the solvency of the state-owned utility, strengthening the enabling environment for private generation, and promoting a 400 MW gas-to-power plant and associated 560 kilometer transmission line that will be the first phase of a desperately needed north-south transmission backbone for the country. At the heart of it all is the creation of a new independent energy regulator, the Energy Regulatory Authority (Portuguese acronym ARENE).
Countries must have a politically independent regulator that allows private investment while protecting consumers. In 1997, the Government of Mozambique created the National Electricity Council to perform certain functions of a regulator, but only in a non-binding advisory capacity. Over the years, discussion of setting up an actual regulatory body continued. Mozambique achieved this in 2017, when Parliament approved the law creating ARENE. The law was formally published on September 8, 2017 and went into effect three months later on December 9, 2017.
The USAID-funded Supporting the Policy Environment for Economic Development (SPEED+) project and Dr. Ashley Brown, Executive Director of the Harvard Electricity Policy Group, partnered with members of the Mozambican Parliamentary Economic Commission, the private sector Confederation of Business Associations, and the National Electricity Council to strengthen specific elements of the law to ensure ARENE has the necessary authorities to be politically independent, effective, and deliver high quality service. Central elements of discussion related to insulation from short-term political pressures, transparent and accessible decision-making processes, agency structure, procedural and substantive principles that must be adhered to, and applicable methodologies to be adopted by ARENE. The consultation process was successful, resulting in a final law that addresses all of the principles encouraged by Power Africa, namely:
- ARENE’s independence, objectivity, proportionality, transparency, impartiality, and predictability (Article 5)
- Energy market competitiveness (Article 3c)
- Investors’ and consumers’ interest and protection (Article 3e)
- Energy efficiency (Article 3d)
- Economic feasibility (Article 3d)
- Environment sustainability (Article 3d)
Now that ARENE has been established, Power Africa will continue to work with ARENE leadership to help ARENE to become the independent, capable regulator Mozambique needs.