KfW programme creates incentives for private sector involvement in Mozambican energy sector

On behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), KfW signed a EUR 25 million grant with the Mozambican Ministry of Economics and Finance for the GET FiT (Global Energy Transfer Feed-in-Tariff) programme in Mozambique.

The aim is to facilitate the market entry of private investors wishing to engage in electricity generation from renewable energies. The GET FiT programme will promote investments in photovoltaic systems including battery storage of up to 32 megawatts in total. It provides for various instruments for this purpose: On the one hand, the financial gap to the existing feed-in tariff will be closed by cost-covering top-up payments to the investor. Furthermore, the costs for connecting the solar systems to the electricity grid will be covered and the electricity purchase risk of the private electricity providers will be reduced by a guarantee facility.

“We are convinced that even in one of the poorest countries in the world, including Mozambique, private investment in power generation and favourable electricity tariffs are possible through public international tenders and competition and under conditions that are attractive to the market. This is also good for the end customer, who has to pay the electricity bill,” said Prof. Dr. Joachim Nagel, Member of the Board of Managing Directors of KfW Group.

The project supports the government of Mozambique in its efforts to supply the entire population with electricity by 2030. At present, only just under one-third of the population has access to the electricity grid. The GET FiT programme concentrates on the north and the centre of the country, where 77% of the population lives and the electricity supply is particularly inadequate and unreliable – one of the main obstacles to economic development. KfW is already financing successful GET FiT programmes in Uganda and Zambia.

Original source: KfW
Published on 04 September 2019