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Mphanda Nkuwa Dam: a climate change millstone around Mozambique’s neck*

by Rudo A. Sanyanga

Executive Summary

The Mphanda Nkuwa hydropower dam project, mooted more than two decades ago, has re-emerged as a solution for increasing power exports to South Africa to enable Mozambique to increase its capacity for earning foreign currency. The project is now being promoted at a cost of USD 4.5 billion comprising USD 2.4 billion for the dam and power plant, plus USD 2.1 billion for transmission lines. This essay discusses the merits of the Mphanda Nkuwa hydropower project and its socio-economic and development benefits in the face of climate change impacts, at a time when the world is facing energy challenges that require rethinking the most sustainable types and sources of energy for the future.

The Mphanda Nkuwa Dam would be the third largest dam to be constructed on the main stem of the Zambezi River and one of many other dams in the basin when the Zambezi tributaries are considered. Its location in the lower Zambezi River basin, in Mozambique, gives it unique features and makes it vulnerable and also crucial in determining the health of the downstream ecosystems. As currently designed, the hydropower plant has a 1500 MW generation capacity, with 60% (900 MW) of this capacity committed for export to South Africa and the balance of 600 MW (40%) reserved for domestic consumption in Mozambique. Currently, over 60% of Mozambicans, most of whom live in widely dispersed settlements in remote rural areas, do not have access to modern electricity and are out of reach of the existing national electricity grid. Far much more than 600MW would be required to enable Mozambique reach 50% access to electricity by 2030.

The project is planned for commissioning in 2030, with about 2 years of this needed for planning and design, while construction is expected to take 6 years. The touted benefits of Mphanda Nkuwa are doubtful in the face of climate change and the fact that the dam will be detrimental to downstream ecosystems, as well as human health and safety while leading to the loss of livelihoods for downstream communities. As is the case in most similar large infrastructure projects, the Mphanda Nkuwa dam and hydropower project is drawing favor from international financial institutions such as the Africa Development Bank who view it purely from a macro-economic viewpoint as an avenue for spurring economic growth in the country through increased foreign currency earnings. The proponents of the project, however, overlook the several risks that are associated with the project and, thus, do not discuss how these risks will be addressed.

Of major concern among the risks is the issue of climate change. Following some detailed analysis, the IPCC found that, out of the 11 main river basins in Africa, the Zambezi Basin is the most vulnerable to climate change impacts. The Zambezi basin is predicted to experience severe extreme weather events in the form of prolonged drought periods, and extreme flooding events in the future, the worst of all other basins on the continent. Furthermore, the Lower Zambezi is directly affected by developments upstream, with the negative impacts of upstream developments being compounded at Mphanda Nkuwa and downstream. In the past decade, Mozambique has been the worst climate change affected country among all the SADC countries with numerous extreme weather events of cyclones and flooding being experienced. The operations of the upstream dams at Kariba, Kafue and Cahora Bassa, with their large combined storage capacity, will be key to the performance of Mphanda Nkuwa.

Being located downstream of the large dams, the major risk for Mphanda Nkuwa will be during drought periods when the upstream dams may not release water as the upstream countries may prioritize their own needs. The high risk of droughts in the Zambezi basin, wrought by climate change, will have a direct negative impact on the financial and economic viability of the project, as the projected revenue generation and foreign currency earnings will be severely curtailed by prolonged droughts. The withholding of water in upstream dams during droughts will also endanger the ecological flows of the river below Mphanda Nkuwa, with further detrimental effects to prawn fishing in the delta region.

Similarly, in the event of large floods, upstream dams will release water downstream, thereby creating risks of dam failure at Mphanda Nkuwa as well as worsening human safety downstream in the Zambezi valley. The risks to dam safety as a result of flooding may necessitate more expensive design features and higher construction costs. The high risk of loss of human lives and threat to human livelihoods in Mozambique due to floods has been fully demonstrated by numerous catastrophic flood events in the lower Zambezi valley in the past two decades. It therefore follows that Mphanda Nkuwa is highly susceptible to climate change impacts with respect to both droughts and floods.

Mphanda Nkuwa hydropower is touted as clean energy. However, emerging studies worldwide are indicating that dams emit considerable amounts of methane, with methane as a more potent greenhouse gas than carbon dioxide. At a time when the world is facing huge global warming and climate change risks, the decision to proceed with Mphanda Nkuwa is unfortunate and flies in the face of conventional wisdom.

Mphanda Nkuwa is premised on power being sold to the Southern African countries, with South Africa’s power utility company Eskom being the principal customer for the electricity. It is important to note that over the past 15 years Eskom has been experiencing serious long-standing governance and structural challenges resulting in a chronic debt problem amounting to over ZAR 500 billion, which is equivalent to USD30 billion at the time of writing. Thus, the South African power utility is facing serious financial viability challenges which render it a risky customer on which to base a huge investment of USD 4.5 billion. As a result of its worsening financial position, Eskom has been progressively increasing domestic electricity tariffs in the past decade, with the result that some of its major customers, especially the wealthy ones, have been moving off the grid, thereby creating risks to its revenue collection and also worsening the power utility’s financial viability. Clearly, this issue is a red flag that the proponents of the Mphanda Nkuwa dam project need to seriously interrogate in their market analyses. The delicacy of the viability of Mphanda Nkuwa becomes even more stark when viewed against a background of the current power purchase agreement of Cahora Bassa power to South Africa, whose electricity pricing is highly unfavourable for Mozambique.

Other concerns regarding Mphanda Nkuwa include the claimed increase in energy access for Mozambicans. While on paper the claim is made that 40% of the Mphanda Nkuwa power will be availed to Mozambicans, in reality the impact on access to power for Mozambicans will be insignificant. The dispersed, extensive rural settlement pattern of most of the Mozambicans who currently do not enjoy access to clean energy, and the absence of an extensive grid network renders the claim that Mphanda Nkuwa will increase access to electricity a fallacy. Mozambique lacks an extensive transmission and distribution network and, even with the proposed transmission line, the majority in the rural areas will still remain unconnected to modern electricity. Grid electricity will not be enough to increase access and spur development in the country. At any rate, the cost of the electricity, without subsidy, is unlikely to be affordable for the majority of the citizens.

The Mphanda Nkuwa dam development pays very little attention to the basin ecosystem health and social wellbeing of downstream communities. The operations of the Mphanda Nkuwa dam will significantly alter the flow regime of the downstream area, creating daily fluctuations that will affect aquatic biota as well as the livelihoods of over 200.000 inhabitants who live in the delta and who, to a large extent, rely on the natural resources of the basin. The livelihoods of the communities that reside in the area that will be inundated should not be discounted. Based on what has already transpired and been experienced in other mega infrastructure projects in Tete province and across the country, these people will likely be subjected to forced displacement, curtailed livelihoods, inadequate compensation, State violence and repression and other human rights violations. The people in the basin will be the main losers from this development.

In conclusion, the investment is unlikely to significantly increase industrialization and spur economic growth in Mozambique. Very limited direct permanent employment can be expected to emanate from this hydropower development. No gains will be made in terms of climate change GHG emissions, and sadly more emissions will result from the hydropower dam. The revenue from the electricity sales may not cover the costs of production with potential of failure to service the debt for the dam. Several studies have been done for South Africa and Mozambique that demonstrate that clean energy can be harnessed through wind and solar to reach the widely dispersed rural population at a much faster pace, creating jobs and comparatively having fewer negative social and environment impacts. Against this backdrop, Mozambique has a huge potential to turn to renewable energies, and change its energy trajectory for energy development, distribution and generation. If implemented, the Mphanda Nkuwa will be a millstone around the neck of Mozambique for many generations to come.

*This study was launched in Maputo on July 21st 2022. To get a copy of the study please go to Justiça Ambiental’s office on Rua Willy Waddington, 102, Bairro da Coop, Maputo, or download it from this link: www.drive.google.com/drive/folders/1FXkv0z4PzdOT6yhueYhPqXVCo_9di4Qz

For more information: +258 84 3106010 / jamoz2010@gmail.com

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