Output-based aid in Mozambique: private electricity operator connects rural households

pproaches J a n u a r y 2 0 0 5 N o t e N u m b e r 0 0 3 Output-based aid in Mozambique Private electricity operator connects rural households By Mark Cockburn and Caroline Low M ozambique's first privately operated concession to EdM has focused much of its recent investment on generate, distribute, and sell electricity is now up extending the grid, which will provide northern prov- and running in a rural area of Inhambane Province inces and other outlying areas, now powered by stand- isolated from the country's main transmission grid. The contract alone diesel generators, with cheaper and more reliable was won through competitive bidding by a Mozambican and power purchased from Cahora Bassa or South African South African consortium and leaves the private operator free generators. But this focus on grid expansion leaves to develop the power system in the concession area in the way fewer resources for building local distribution networks most cost-effective. Designed to tackle the extremely low levels and for improving the performance of isolated systems of connectivity, the concession uses output-based aid subsidies to while they await the grid. close the gap between what new infrastructure costs and what Meanwhile households without access to electricity households are willing and able to contribute. Payment of the typically pay as much as 40