Mozambique's new electricity sector regulation

The Regulation covers the entire electricity value chain — generation, storage, transmission, distribution, supply, import and export — and, for the first time, expressly regulates energy storage as a standalone activity, reflecting the growing relevance of storage technologies in the energy transition. The new legal framework assigns a central role to the Energy Regulatory Authority (“ARENE”) in organising tenders, supervising concessionaires and resolving disputes. It also introduces the National Electricity System Operator, replacing the former National Transmission Network Manager, with broader integrated system coordination functions.

Concessions are awarded, as a rule, through public tender, organised and administered by ARENE, with direct award permitted only in exceptional circumstances. For projects ≥ 100 MW, the tender is authorised by the Council of Ministers; below that threshold, by the Minister of Mineral Resources and Energy.

The Regulation details the tender stages — from the publication of terms of reference to contract negotiation — and expressly introduces the obligation to conduct due diligence during the negotiation phase, including by an independent expert, as well as public consultation whenever the project involves the acquisition of land use rights (DUAT).

The new Regulation introduces a tiered system of mandatory financial guarantees: (i) 0.1% of projected investment at proposal stage; (ii) 10% at contract execution, securing implementation; (iii) 5% at the start of commercial operations, as a performance bond; and (iv) 5% upon handover. For large-scale projects (investment exceeding MZN 12,500 million, referenced to 1 January 2009), guarantees under (ii) and (iii) are capped at 2.5% to ensure project viability.

On investment, the Regulation expressly provides that electricity supply undertakings fall within the applicable investment and tax incentive regimes, including the Investment Law — a clear signal of encouragement for private sector participation.

Guarantees may be provided by way of surety, bank guarantee or parent company guarantee, by agreement between the parties, offering flexibility compatible with typical project finance structures.

One of the most significant aspects of the new Regulation for investors and legal advisors is the detailed regime governing transfer of concessions and change of control. The partial or total transfer of the contractual position — including the transfer of shares or any holdings resulting in a change of corporate control — requires prior written authorisation from the competent authority, administered by ARENE. The Regulation defines “control” as decision-making power equivalent to more than 50% of voting rights or any other instrument conferring de facto management power.

The Regulation sets the following initial maximum terms for concessions:

(i)        up to 30 years for hydroelectric developments and public-domain water sources;

(ii)      up to 25 years for generation from other resources, as well as for transmission and distribution;

(iii)     up to 10 years for supply.

The term begins on the date the competent court issues the prior approval certificate. Renewal is subject to public tender and capped at 20 years, with the concessionaire required to apply at least 24 months in advance and demonstrate compliance with contractual obligations and technical-economic viability for the new period.

The Regulation introduces significantly enhanced local content requirements, mandating that concession contracts include vocational training programmes, technology transfer, partnerships with Mozambican companies and the creation of opportunities for local businesses across the value chain — including support for business registration, legalisation and ISO certification. This represents a substantially more detailed regime than the revoked decrees.

On compliance, the concession contract must now mandatorily include an anti-corruption clause, cybersecurity provisions, health, safety and environmental obligations, corporate social responsibility requirements and separate regulatory accounting obligations. Concessionaires must also implement adequate cybersecurity measures to protect the operations and users of the National Electricity System — an entirely new requirement under the current framework.

The Regulation introduces an innovative Decommissioning Fund regime: where the concession is not extended, the concessionaire must submit a decommissioning plan to ARENE at least 24 months prior to cessation. The Fund is held in a ring-fenced bank account in Mozambique and financed by periodic deposits, accrued interest and residual asset values.

For project lenders, a key feature is that upon termination of the concession, loans taken by the concessionaire to finance concession activities are repaid to creditor financial institutions by the competent authority as assets revert to the State, provided those institutions hold security over the concession’s rights and obligations. The Regulation further provides for the possibility of transfer of the concession to lenders (step-in rights), affording additional creditor protection.

The Regulation enshrines non-discriminatory third-party access to the National Electricity Grid, subject to payment of a transit tariff and execution of a contract, where capacity is available. Concessionaires are prohibited from impeding competitor entry and from engaging in monopolistic practices and must conduct their activities on a non-discriminatory basis.

On supply, the Regulation introduces a distinct regime allowing supply concessionaires to purchase energy from generators and sell directly to consumers, subject to prior price approval by ARENE — paving the way for greater liberalisation of the electricity market.

 ARENE is vested with strengthened monitoring and supervisory powers, including site visits, inspections, audits and access to concessionaires’ information systems. Regulatory disputes between concessionaires or with consumers are subject to mediation and administrative decision by ARENE, without prejudice to arbitration or court proceedings. Non-compliance is subject to fines (updated by joint ministerial order) and, in cases of risk to public health, safety or the environment, ARENE may take corrective measures on behalf of and at the concessionaire’s expense.

The Regulation came into force on the date of its publication, 7 July 2026. Until the statutes of the National Electricity System Operator are approved, its functions are performed by Electricidade de Moçambique, E.P..

The Energy & Natural Resources team at GDA is fully available to provide any clarifications on the new Electricity Sector Regulation, as well as to analyse its impact on the activities of investors, concessionaires, lenders and service providers across the energy value chain