MOZAMBIQUE CONSULTANCY REPORT O

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					    MOZAMBIQUE CONSULTANCY REPORT ON BIO-FUEL STUDY

    1. INTRODUCTION

African countries have relied on fossil fuels, hydropower and biomass to meet energy demands
for the urban and rural needs. Concomitantly, the supply of fossil oil has been affected by
dynamic economic, environmental, and political and security instability throughout the world.
This has lead to the current high and volatile prices that affect the prices of many other
commodities such as agricultural inputs as well as food products. Mozambique is one of the
countries whose citizens rose up and manifested against the ever increasing prices of oil and the
effect on their lives, particularly transport costs and food. Energy is a fundamental engine for
economic growth and the current inability to sustain the supplies at reasonable price will have a
short and long term impact on the ability of the countries like Mozambique to deliver on its
poverty reduction strategy and achieving the Millennium Development Goals.

The Vision 2025 for Mozambique prioritises the supply of energy and expansion to rural areas as
a necessary step towards equitable development and poverty reduction. The PRSP for 2009-2009
(GoM, 2006) highlights the following priorities: transformation of agriculture to increase its
competitiveness in the international markets as well as the formulation of a national sustainable
energy policy, promotion of investments in dams for production of hydroelectric power and
guarantee the sustainable use of natural resources. In addition, the government pledges to increase
the distribution of the network of distribution of liquid fuels including diesel, unleaded petrol,
introduce the use of gas for transportation as well as search for alternatives such use of solar,
wind and biomass energy to counter the deficit.

Besides fossil fuels, over 70% of the population in Mozambique rely on biomass energy such as
firewood for their domestic needs. For many decades this has impacted negatively on the natural
resources, principally deforestation around the main urban centers of Maputo, Beira and
Nampula. State led energy plantations of the late 70’s and early 80’s, agroforestry and community
forestry that followed have all failed to provide an alternative (to deforestation of natural forests)
due to the intrinsic characteristics of the exotic species, lack of capacity (financial and
managerial) on the part of the government and, unclear land and tree property rights, which were
crucial for community involvement.

Therefore, Mozambique continues seeking for alternative sources of energy through increased
production of hydroelectric power and expansion of the supply network to rural areas, exploration
of natural gas, improved efficiency of energy biomass energy utilization, prospecting oil in the
major river basins, particularly Rovuma in the North of the country as well as seeking the
introduction of biofuels. This led the country to start a campaign at high political level to
mobilize people to engage in plantation of Jathropha for further processing into biodiesel. Again,
the poor planning of this process is reflected on the fact that people were urged to embark on
plantations in most cases of uneconomic units without a strategy for marketing the raw material
or support in training on and establishment of simple processing technologies. Yet Mozambique
is considered in the UN Framework (2007) as one of the four countries in Africa that has a policy
framework for biofuels. As it will be seen later there is definitely a political will to embark on
large scale production of biofuels, but there is no clear policy and strategy as yet.

Mozambique is considered by analysts as one of the African countries with the largest biofuel
production potential. Researchers affiliated with the International Energy Agency estimate that
Mozambique can produce around 7 Exajoules of biofuels sustainability. The country currently



                                                                                                    1
consumes around 0.18EJ. Consequently this would lead to full energy independence, with
capacity to spare to supply international markets.
The country is under pressure to embark in a grand scale production of biofuels. Ethanol and
biodiesel are two liquid biofuels which can potentially be produced from vegetative materials
such as respectively sugarcane, cassava and maize and, coconut, cotton, groundnuts and sesame.
Besides meeting the demand for energy, the production of biofuels is also credited with having
potential impact in reducing the emission of green house gases, hence contributing to mitigation
of climate change. Further the production of biofuels is believed to have a great potential to
contribute to poverty alleviation in the country.

Amidst this situation, WWF SARPO has commissioning a study to analyse the existing policy
and institutional frameworks supporting the production and commercialization of biofuels, the
sustainability of supply and markets, distribution of benefits and capacity of various stakeholders
involved in the process (WWF SARPO, TOR). Further, questions are raised with regards to
potential risks to food security due to competing land use and marginalization of local
communities particularly with respect to security of land tenure. For example, FAO is already
engaging in projects to seek to establish the impacts of biofuels on food security and approaches
to compilation and analysis of biofuels statistics. Information is fundamental aid to decision
making besides facilitating the monitoring of the impact of the pursued policy options.

A particular focus of this study was the Zambezi river basin Delta) which supports a large area of
wetlands offering good agroecological conditions for growing sugarcane and other biofuel crops.
The objectives of the study include: (i) Carrying out a survey of existing bioenergy policies and
technological capacity in the production process in each site. (ii) Describing levels of production,
the drivers of the production (big companies) and status of out grower schemes/ communities in
each site including an analysis of capability, land availability, technology, investment and crop
quality as well as potential environmental impacts. (iii) Evaluating the economic and financial
potential for the community/out grower schemes and likely contribution to national strategies on
energy, poverty reduction and likely impact on the environment. (iv) Providing a critical
comment on the economics of biofuels production and marketing as well as propose
improvements to ameliorate the social and economic benefits of the current and future schemes.
(v) Articulating the manner of support that would ensure that this capacity is used effectively.

The report is outlined as follows: a brief presentation of data collection approach followed by a
section analysis the socio-economic context as regards energy consumption in the country and the
existing policy and institutional policies as well as gaps. Then an analysis of the various
initiatives that are being planned or implemented is conducted in the next section. The final
section draws some conclusions and recommendations.




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       2. METHODOLOGY/APPROACH

UN (2007) has developed an analytical framework that highlights various sustainability issues to
be considered in the process of decision making on whether to embark bioenergy production as
well as checking on the impact. The framework includes issues such as the provision of bioenergy
for the poor, implications for agro-industry and employment, the impact on the structure of
agriculture and food security, possible impact on health and gender taking into account that
women in developing countries are the main producers and users of biomass for energy with
consequent health impacts. The article on IRIN website poses the following important question:
‘Africa: food to eat or run a car?’. There is need to determine the trade offs associated with
bioenergy and food security to aid an informed decision making on land use, technology and
labur use. Other issues suggested by the framework include the financial support from
governments or impact on the budget, implications on trade, foreign exchange balances and
energy security, impacts on biodiversity and natural resources management and on climate
change. However, the broad categories of issues that this framework recommends are: (i) the
existing knowledge on the resources, demand and technologies; (ii) overall policy and rural
development priorities, land use, environment, industry as well as existing initiatives in research
and development. This study analysed the extent to which the various aspects mentioned in the
framework are considered in the ongoing decision making regarding the biofuels.

The study as such consisted of literature review, interview (face-to-face and telephone) of various
individuals representing various institutions engaged at:
        policy development level such as the case of the Ministry of Energy particularly the
        National Directorate of New and Renewable Energy, the Centre of Promotion of
        Agriculture (CEPAGRI), the National Directorate of Lands and Forestry (DINATEF),
        the National Directorate of Conservation Areas (DNAC) particularly the Transfrontier
        Conservation Areas (TFCA) Unit which oversees the activities in the Great Limpopo
        Transfrontier Park, the National Directorates of Environmental Management (DNGA)
        and Environmental Impact Assessment (DNAIA).
        Government institutions facilitating implementation of the policy and legal framework at
        the local level in Sofala province including the Provincial Director of Agriculture and
        the Head of the Provincial Services of Forestry and Wildlife in Beira and the Provincial
        Directorate of Agriculture in Gaza province. It was also possible to meet the Head of the
        Administrative Post (the lowest administrative unit in the country) of Xinavane in
        Manhiça district in Maputo province as well as the technical assistant for the sugar cane
        associations of the same administrative unit.
        Research institutions such as the Faculties of Agronomy and Forestry and Faculty of
        Engineering (FAEF) of the Eduardo Mondlane University (UEM) both conducting
        research in areas of bioenergy from the study of ecological aspects associated with
        various species as well as the various processing and efficient use technologies.
        Community conservation and development practitioners such as the African Wildlife
        foundation (AWF) supporting one of the affected communities by this (biofuels)
        initiative and WWF with overall concern on conservation and management of protected
        areas in Mozambique.
        Interviews were also held or attempted with investors1 such as SEKAB or Eco-energia,
        and Açucareira de Xinavane (Tongaat Halett) in Maputo, Açucareira de Moçambique in
        Mafambisse in Sofala (outside the Delta) and Açucareira de Marromeu.

1
    Unsuccessful attempts to meet PROCANA manager – travel.


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         Interviews were also held with two community associations producing sugar cane under
         contract agreement with Açucareira de Xinavane in Maputo province.
In total 22 interviews were conducted including a sample of over 30 people (Appendix 1)
between 27th April and 9th May 20082. The consultant also attended a seminar on biofuels in
Maputo organized by FEMA3, which is a forum of private sector for environmental management.

The TOR limited the study area to wetlands and particularly the Zambezi Delta. Nevertheless, for
practical reasons particularly the relative absence of ongoing activities in the area led to opening
the scope of the study. In fact, the telephone interview with the manager of the Açucareira de
Marromeu and local government authorities in the Sofala province established that there were
only fuzzy plans for production of bioethanol from molasses and bagasse which is currently
exported. The company manager reiterated that any future involvement of the company in
production of biofuels would be determined by the approval of the government strategy in this
regard and the initial phase of such production would be directed to internal use by the company
to reduce its current soaring cost of production due to high cost of fuel. Furthermore, the
members of the management board of the Açucareira de Mafambisse were engaged in a two day
meeting, hence only available for a telephone conversation.

Consequently, looking at the ongoing or planned activities to produce biofuels at a larger scale
seemed to be a more rational approach. However, there are obviously trade offs between the
ability of undertaking a detailed analysis of financial and economic viability of the involvement
of small-scale farmers in biofuels production versus a broad understanding of the challenges of
withstanding an external pressure to license the biofuels production and, meeting goals on
environment, eradication of hunger and poverty. These are important millennium development
goals that the government subscribes to and strives to deliver on, and implicit the TOR as they
raise the concerns over the livelihoods of the people and environmental sustainability.

The findings of the study are integrated in the discussion of policies to illustrate the interface
between the good policy intentions for example regarding land allocation procedures and
participatory natural resources management and practice. The dilemmas and conflicts between
existing rights and ‘superior’ rights of investors for biofuel production and other economic
activities highlight some of the inefficiencies in policy implementation.




2
  Travel time included, time limitation did not allow meeting with institutions such as Technoserve, GTZ,
the World Bank, the Italian Cooperation and consulting companies such as KPMG and Sal e Caldeiras all
perceived to interests in the biofuels or contributing in various ways. Although the Açucareira de Xinavane,
was visited, the managers were not authorised to discuss the issue and instead recommended to contact
Tongaat Hallet in South Africa. The information regarding production of biofuels presented in this report
was found in the website.
3
  This institution often calls for its members to observe social and environmental corporate responsibility in
undertaking of their economic activities.



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      3. BIOENERGY PRODUCTION IN MOZAMBIQUE: THE CONTEXT AND POLICY CHALLENGES
      3.1 SOCIO-ECONOMIC CONTEXT

Mozambique has a total land cover of 784,089 Km2 and 17,500 Km2 of inland water, although
about 40% of the land is somewhat arable, only 10-15% is currently under cultivation and
productive forest covers 51% of the country while 19% has woodlands with miombo and mopane,
thickets and forests under shifting cultivation.

The country’s population is 20.5 million of which 63% still lives in rural. The poverty incidence
is 54% and there is a growing tendency towards a more skewed wealth distribution. This
increased from 0.40 in 1997 to the current 0.42 and the GDP per capita is still among the lowest
(less than USD 500). 78% of labour in the country works in the agricultural sector, which
contributed 22.6% to the GDP in 2006. The HIV/AIDS menace affects about 16% of the
population.

Most of the population in Mozambique consumes biomass energy considered to be an important
factor in deforestation which is about 0.3% per annum. The draft report of the DINATEF for
2007 indicates that last year the licensed exploitation of biomass energy, particularly charcoal and
firewood was around 781,566 bags (generally of 50 Kgs) and nearly 38,000 m3. Both total over
6604 thousand m3 of wood. This accounted wood biomass is just a partial reflection of the urban
demand for fuelwood as most of the registered producers supply the urban markets and over 12
million m3 more are consumed in the rural areas. The price of charcoal has been increasing over
the years and a bag costs about 14 USD almost while the price of gas is about USD 20 for a 12-15
Kg cylinder. The production of gas and electricity only meets the demand of a minority of
households and major urban centres. Only just over 80 kWh per capita of electricity is available
hence the widespread use of generators of electricity from diesel in most rural towns. The
production capacity of gas is 3 million m3, with production almost reaching the full capacity.
According to the evaluation of the biggest 100 companies in Mozambique in 2006, the energy
sector is growing, with 18% increase in gas production of which almost 99% is exported, 11%
increase electricity and 2% for renewable energies.

Mozambique relies on imported fossil fuels to run its economy. For example, the imports of
diesel and petrol reached respectively nearly 124 and 520 thousand m3 (KPMG, 2003). The major
market players in terms of distribution are led by PETROMOC with 35%, BP Mozambique
(30%), Total (14%) with the rest shared by Petrogal, Mobil, Shell, PESS, CALTEX and Engen.
The overall consumption of fossil fuels in the country is about 590,000 tons of oil products per
year mostly diesel. From the point of view of (size) market this is considered to be very small.
Hence the country’s engagement in biofuels is seen as bringing an opportunity for independence
of the country in terms of capacity to generate energy for internal consumption. In fact,
PETROMOC (2008) states that the local market have the capacity to consume 100 thousand m3
even at higher blending levels of 15-20%. Additionally, the consumption of fossil fuels comes at
an increasingly high price up from less than 40 USD less than five years ago to over USD 130 in
2008. These prices affect the performance of the economy as it is one of the major expenses in
the production and service sector. Therefore, it is critical for Mozambique to search for
alternative and cheaper sources of energy. However, the excessive production capacity being
sought in the country aims at meeting the needs of the foreign markets. While this may be


4
    Cconversion of bags to volume of wood done by the author


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positive in terms of generation of foreign exchange and improve the balance of payments, what is
the opportunity cost?

      3.2 THE POLICY AND LEGAL FRAMEWORK: CONTEXT AND GAP BETWEEN INTENTIONS
           AND PRACTICE
      3..2.1 Energy Policy

The current policy framework includes the 1998 Energy Policy and the 2000 National Strategy
for Energy. The objectives are as follows: ensure supply of energy at low cost; promote
reforestation to increase the availability of biomass energy; promote investment in the
development of various sources of energy such as forests, water, and natural gas; promote
technologies for exploitation of alternative sources of energy such as solar and wind energy. The
strategy for implementation of such policy objectives include interventions to improve
availability of electricity5 and increase distribution to the rural areas, exploitation of mineral coal
and prospecting oil; promote sources of renewable energy products. Although not explicit the
production of biofuels is a way contemplated in the last objective. However, recently there has
been a significant interest of the government and pressure from multinationals to invest in
biofuels. As a result the government had to start a more focused process of reflection and
development of policy and legislation. The Decree No 63/2006 was the first regulatory instrument
to provide some guidance on the import, distribution and commercialization of petrol products as
well as explicit provisions to accommodate the possibility of production of bioenergy in the
country.

Concomitant to that, the Government of Mozambique has commissioned studies to look at the
potential, viability as well as possible impact and sustainability of biofuels production in the
country. These studies are to inform the content of the policy and strategy. According to
PETROMOC (2008) the aim of the Biofuels strategy includes:
    o “reduction of import of liquid fuels; widening the access to energy sources;
    o job creation opportunities;
    o diversification of community livelihood strategies hence being a vehicle for poverty
         reduction;
    o radically changing the agriculture paradigm, including food production, by creating or
         sharing basic infrastructures, establishing important synergies and enabling otherwise
         scarce flows of investment into the agribusiness;
    o creation of a set of valuable by-products like the co-generation of electricity, production
         of organic fertilizers and supply of human and animal feed proteins;
    o valuing the enormous and dormant agro-climatic potential of the country;
    o making good use of the geostrategic location of the country and respective irrigation,
         harbour and petroleum infrastructures;
    o making a significant contribution to the global effort for the mitigation of the
         environmental damages;
    o being part of the vast and ever-growing international biofuels market through its export;
    o and increasing the overall production capacity of the country.

The biofuels assessment suggests some elements for the strategy and National Biofuels
Programme (NBP) in Mozambique (Box 1).




5
    Law on Electricity approved in 1997 (No 21/1997)


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 Box 1: Issues /areas that should be considered in the National Biofuels Programme

 Elements to be considered
 o Focus on establishment of a domestic market in the short term and create demand for biodiesel and bioethanol
     for transportation and industrial purposes. The strategy would be to progressively blend the bio and fossil
     fuels at relatively short intervals to stimulate the emergence of the necessary production capacity.
 o Investigate regional market opportunities, coordinate biofuels provisions, imports specifications of the
     different SADC countries as well as seek to establish partnerships with large international biofuel exporters.
 o Promote a diversity of feedstocks (such as rehabilitation of the coconut plantations, expansion of soy,
     sunflower, castor seed cultivation, jatropha, research on the African palm incentives for utilization of molasses
     and bagasses to produce ethanol, promote sweet sorghum and introduce small scale cassava processing) to
     limit, for example, the impact of price fluctuations while promoting the agricultural potential of the different
     agroecological zones in the country.
 o Introduce key policy incentives that include biofuel content for gasoline and diesel respectively starting in
     2009 and 2012; premium over CIF (cost, insurance and freight) of imported fuels to be paid by blenders
     allowing sufficient returns for producers and farmers; exemption of tax on fuels for pure biofuels; mechanism
     for compensation to limit biofuels price variations; authorization of feedstocks for biofuels; introduce feed-in
     tariffs for electricity cogeneration facilities at biofule plants.

 Measure for socio-economic and environmental sustainability:
     o Guidelines for large-scale monoculture to reserve land for small-scale producers.
     o Small scale production of less than 3 million liters/year should be exempt from regulatory oversight.
     o Ensure technical and financial support to rural communities involved in biofuel production.
     o Utilization of multi-feedstock in particular non edible crops to safeguard food security.
     o Provide the necessary capacity for the Ministry of Environmental Affairs (MICOA) to conduct an
          objective analysis of the impact of biofuels on the environment.
     o Use land that has never been under cultivation or has laid fallow for long periods (since independence).
     o The government should monitor the development of standards for certification of biofuels.


The suggested areas of focus for the strategy seem to be plausible in particular the need for
diversification of feedstock which is essential in as far as mitigating environmental catastrophes
(plagues, diseases, soil degradation) that can be associated with monoculture. Promotion of
outgrower schemes or other forms of engagement of the local communities in the production
chain is also a critical aspect for the strategy.

One of the growing criticisms and scepticism of the biofuels is associated with the fear of
substitution of crop production to meet food security with supply of raw materials for this
emerging industry. An article on whether Africa should produce food to eat or run the cars is
illustrative of that concern. Different opinions being voiced during this study in regards to this,
most of which recognize the pertinence of the debate (food or fuel) but criticize the fact the
discussion on the two issues is parallel, led by different institutions, using different fora instead of
having a coherent, integrated and concomitant analysis. Another opinion is that any negative
impact of biofuels in food production is likely to be temporary. Yet, other opinions deem such
debate as ‘dishonest’ on the basis that biofuel production will only use a fraction of land available
for agriculture, therefore without a justifiable need for concern. However, the concern with
biofuels clearly goes beyond the issue of area occupation and it extends to selection of crops,
farming systems, participation of local communities, respect for their rights to land and other
resources. For example, maize is staple food in the country, the majority of the population also
consume fresh or processed cassava, and the coconut has been used for direct consumption or for
production of oil. Henceforth, the change of the ‘traditional’ use of any of these crops certainly
should be accompanied by an analysis of the tradeoffs to facilitate an informed decision making


                                                                                                                         7
process. Therefore, the recommendations for the strategy (Box 1) establish provisions and
incentives to avoid use of edible crops for biofuel production could not be more appropriate.

However, there are also challenges in the materialization and viability of some of the suggestions.
For example, the establishment of land that has not been used for as many years as pre-
independence does not necessarily mean that there has already been a satisfactory supply of land
for food production. Most farmers in Mozambique cultivate small plots due to the lack of
capacity in terms of finances to purchase inputs; there is limited agriculture extension and hence
scanty access to improved technologies as well as the poor infrastructure for storage and
transportation of surplus to markets. This means that improvement of the production of small
holders can play an important role in increasing the land productivity but also it may stimulate
demand for expansion of the agricultural land. Furthermore, the current second phase of the
agricultural sector investment program (PROAGRI II) also establish the need to provide
incentives and support for development of a robust commercial farming sector and development
of agro-processing industries in the country. This needs a more thorough reflection and
prioritisation of zoning (large scale) and conducting a thorough consultative process of
stakeholders in particular the communities in the process of land allocation is paramount to
minimizing the conflict in land use. Therefore, the development of the Biofuel Strategy should
take this into account.


    3.2.2 Land, Forestry and Reforestation

    General land use in the country
As previously mentioned Mozambique has 784,089 Km2 and 17,500 Km2 of inland water. About
15% of the land is protected to conserve ecosystems and biodiversity. According to the recent
national forest inventory by Marzoli (2007) 70% of the country or about 58.8 million ha is
covered with forests and woodlands. However, forests cover only 40.1 million ha of which almost
27 million ha are of productive forests and 13 million are under conservation (forest reserves).
Other sources of information indicate that the country has 36 million ha of arable land which is
suitable both for agricultural crops as well as forest plantations. However, currently only 12
million ha are under agricultural cultivation meeting only about 80% of food needs while the
forest plantations only cover about 24 thousand ha. There also indications that the country
currently uses around 4.3 million hectares out of a total of 63.5 million hectares of potential
arable land, or 6.6 per cent (FAO). Additional 41 million hectares of poor quality land are
available for the production of energy crops that require few inputs and are not suitable for food
production. Koetse and Alves (2005/6) indicate that there are about 7 million ha with potential for
reforestation distributed as follows: Niassa (2.4 million ha), Zambezia (2.1 million ha), Nampula
(1.5 million ha), Manica (860 thousand ha) and Sofala (120 thousand). These statistics give a hint
on the actual and potential competition for land resources including agriculture, timber harvesting,
livestock, tourism, expansion of urban areas, and supply of land for meeting paper and energy
needs as well as alternative sources of wood products to reduce pressure on natural forests,
among others. It is important to note that the Reforestation Strategy aims are silent in relation to
production of biofuels from crops such as jatropha.

Despite the fact that foreign analysis are quick to observe vast masses of ‘available’ land as
quoted in the previous paragraphs the government is taking caution. The allocation of land for
biofuels has been suspended for months now pending the realization and approval of the national
zoning exercise at scale of 1:1000000 by the Council of Ministers. Four classes of aptitude were
considered (high, moderate, marginal and non-apt) for an initial pool of biofuel crops including
sugarcane, sorghum, jatropha and cassava. This was presented for discussion by different


                                                                                                 8
government bodies last May (2008). The scale used in this zoning exercise is object of
controversy (among technical experts) particularly as far as the reliability of its use as a spatial
guide on land suitability and availability. Notwithstanding that there is overall concordance that
this is a necessary first step to support decision making and detailed studies including
consultation with communities will be pursued by investors in order to establish a de facto
availability of land. This is a very critical issue considered that already the land demand is
reaching almost 3 million has and also there has to be caution as far as water demand is
concerned.

A brief account of the main legal instruments that needs to be taken into account in the decision
making on land allocation for biofuels.

Land, forestry and wildlife policies: provisions and some examples of conflicting allocation and
use of land and challenges of community participation
a) Good provisions
The 2004 Constitution, the Land Policy and Law and all other sectoral policies such as Forestry
and Wildlife Policies reaffirm that land and other resources belong to the State. The State has the
prerogative to allocate leasehold rights to private investors for exploitation of resources for a
period of maximum of 50 years renewable. The communities enjoy quasi perpetual rights to land
as the right of occupancy (after 10 years) provides security of tenure and communities can
ascertain collective rights through the process of delimitation, demarcation and subsequent
issuance of a certificate of land use and improvement rights (DUAT). The law also recognizes the
relevance of customary law in as far as it does not contravene equitable access to resources as a
basic human right equally applicable to men and women and the often marginalized groups. All
these provisions are safeguards for the rights of the local communities. Currently, there are about
300 communities with formal land rights in the country and the 2006 government statistics
indicated that more than 4 million ha from 97 communities (DINATEF, 2006) had been entered
in the national cadastre. The draft DINATEF 2007 report indicate that during the year there were
community delimitations in about 1.6 million ha which can lead us to estimate roughly that thus
far there may be nearly 10 million ha under community control.

The forestry and wildlife policy draw significantly on the provisions of the land in recognizing
collective rights and it provides an opportunity for communities to engage in participatory natural
resources management, generate income and manage the resources in a sustainable manner. This
is in fact a strategy adopted as the social objective of this policy. As a result there are currently 70
CBNRM initiatives that have been documented most of which have been accorded the DUAT as
well as having licenses for harvesting resources for income generation. Further, the same policy
provides for benefit sharing between the government and the communities. The latter have 20%
of the revenues from royalties. The 2007 draft report of the National Directorate of Lands and
Forestry indicates that there are more than 1000 communities that reside in areas that the
exploitation of forestry and wildlife is taking place hence being potential beneficiaries. However,
the pre-requisites limit access to the funds. Only 306 communities received over USD 804
thousand which corresponds to and average of little more than USD 2.6 thousand per community.
There has been some debate on why this provision for sharing benefits between the state and
communities does not extend to other sectors such as the mining, water for generation of
electricity, fisheries etc. This issue seems also relevant to ponder about in the context of biofules
production and community consultations. Other than threatening the land rights of the
communities, investments were expected to take development opportunities to the communities
through negotiation of private-community partnerships and fulfillment of the investor’s Corporate
Social Responsibility. If poverty reduction and promotion of rural development are not just
political statements, then the National Strategy for Biofuels should provide guidelines on


                                                                                                      9
partnerships including clarity on community benefits particularly employment opportunities. In
regards to these, the type of jobs, skills required, capacity building etc should constitute important
pillars contemplated in the decision making process for approval of investments. These are to
create wealth for the country and not only extract and export the wealth while affecting the social
organization of the communities and source of livelihoods.

b) Implementation challenges
The policies of land, forestry and wildlife are key in the decision making regarding the allocation
of land for biofuels crops. Either productive land for food crops, land with forestry resources
formally adjudicated to the local communities or perceived as inherently communal due to the
statutory recognition of customary law in establishing the boundaries of community land,
demands a transparent process of consultation for allocation of land to third parties. Further, the
country has known an increase in gazetment of conservation areas within and beyond national
boundaries. Apparently despite the good provision for protection of community rights, the
process of community consultation preceding land allocation for investments is failing.
Therefore, in terms of land there has to be a guide on where and how to allocate land for biofuels.
Otherwise there is clearly going to be conflicts of use and between land users.

One example of policy, process and perhaps political failure in relation to allocation of land for
feedstock for biofuels happened in Gaza province (North of Maputo) where communities affected
by the establishment of the Limpopo National Park were settled in an area that offered
opportunities for developing community tourism activities as well as for grazing. This is the case
of the communities that have been affected by the establishment of the Limpopo National Park
under the Great Limpopo Transfrontier Park. It is almost a decade now since the signature of the
agreement between the governments of Mozambique, South Africa and Zimbabwe to establish
that new conservation approach (ecosystems beyond national boundaries). As a result of this
process the communities affected have been leading unstable lives with successive consultations
(post-decision!!) regarding the issues of resettlement, identification of suitable areas for the
communities to carry on their traditional activities as well as accommodating the interests and
socio-economic setting of the hosting communities. According to the TFCA authorities the
negotiation of the resettlement has taken over 4 years. The map (Figure 1) is illustrative of wider
conflicting allocation of land to communities and investors which are likely to multiply
throughout the country in absence of a national land use planning policy, land use plan and
zoning.
     ZIMBABWE



         Gonarezhou
                                Zinave




                      Banhine



            Limpopo                      MOCAMBIQUE




                                                                     ±
        Kruger




                                           Legend
                                                   Cubo CNC
      SWAZILAND
                                                   National Parks
                                                   Limpopo Heartland
                                                   Massingir Dam


                                         0 15 30   60   90   120
                                                               Kilometers
      SOUTH AFRICA




    Fig. 1 Area earmarked for a community nature conservancy to promote tourism activities (source:
    CONTOUR, 2006)


                                                                                                   10
The Box 2 highlights of ‘giving’ formal rights and the subsequent ‘process of undermining
community rights’. The concept of community land delimitation, the devolution of natural
resources management to community control is being challenged in practice as the interests of the
investors overlap and in fact override acquired and formalized rights of the community.

    Box 2 The process of successive rights ‘transfer’ from communities to investors

    Community rights and development plan
    The Limpopo Heartland is one of the areas of intervention of AWF which includes promoting sustainable
    management of interstitial areas between the protected areas in this case the Limpopo National Park, Banhine
    National Park, Zinave National Park, Gonaredzou National Park in Zimbabwe and Krueger National Park in
    South Africa. The communities of this case study are being allocated from the Limpopo National Park as
    indicated in the map. In some cases the communities had to be resettled to avoid human-wildlife conflicts but
    also to minimize land use conflicts such as farming and animal husbandry and wildlife-based tourism activities
    and conservation of biodiversity. Three communities (Cubo) were supported by the AFW to acquire the Land
    Use Certificate (DUAT) and the communities had already a strategic natural resources management plan
    (CONTOUR, 2006a) and a business plan (COUNTOUR, 2006b) detailing respectively the measures to be
    undertaken to harmonize the requirements of different wildlife species, control of soil erosion, water
    management etc and a plan of the type of economic initiatives to be implemented for the benefit of the
    community. The total area for which the land delimitation certificate was issued is over 100 thousand ha. After a
    zoning process 41 thousand ha were identified as suitable for community based tourism activities.

    Community rights transferred to game farming companies
    Paradoxically, after issuing DUAT for communities, three concessions for game farming were authorized and
    part of the land under community control transferred. In order to accommodate this change in rights,
    negotiations were underway to form joint-ventures between the community and private concessionaires. The
    business plan includes various scenarios of engagement of three investors with whom the Cubo community was
    in a process of negotiating joint ventures.

    Community rights transferred for a biofuels producing company
    A fourth investor (PROCANA) was allocated 30 thousand ha of land for production of sugar cane for bioethanol
    of which 20 thousand identified in the zoning process as pasture land were given to this company. As far as the
    community pasture land, some interviewees indicated that PROCANA has agreed to provide a limited area for
    intensive production of pasture and increased carrying capacity to cater for the community needs.

    What is left for community management?
    The community land was subsequently reduced to 10 thousand ha allegedly due its limited capacity to manage
    an extensive area (100 thousand ha).



It is important to stress that both economic development through large scale investment and
poverty reduction thought security of land resources for the local community are not mutually
exclusive, but rather complementary. In fact, the process of securing resources rights by
communities provides an opportunity for them to have a share6 in a business and have tangible
benefits by the virtue of having resources. The issue however is how consistent and informed is
the government decision making process regarding land allocation and how objective is the
resettlement processes in order to minimize the socio-economic disruptions of the affected people.

The conflict between production of biofuels and land allocation for other land uses will also
extend to forest areas, tourism areas, conservation area, smallholder farming or grazing areas

6
   The signed (by community representatives and other authorities) minutes of the community consultation often
highlight some of the concerns that the communities expect to address when endorsing investments.




                                                                                                                   11
among others. The Figure 2 illustrates again a potential conflict between production of biofuels in
Cabo Delgado and the Quirimbas National Park which is managed by WWF. The distributing of
production areas (yellow in the map) is commendable in terms of minimizing conflicts with
communities and possibly with other uses such forest concessions. However, the location of one
of the areas adjacent to the support/buffer zone of the QNP is likely to cause some conflicts
particularly depending on the specific crops that will be grown in the area, their demand for water
among other uses. Details about the Eco-energia company will be discussed in section 4.




    Fig. 2 Areas earmarked for the production of biofuels by one of the companies requesting
    150-250000 ha in Cabo Delgado Province

The conflicts in implementation of the forestry and wildlife policy did not start with biofuels.
There are numerous examples countrywide. The 2007 annual draft report (DINATEF, 2008)
indicates that there have been 76 land conflicts resulting with 76% occurring in the provinces of
Tete, Cabo Delgado and Zambezia. The report points out several causes of conflicts among which
the high demand for land for tourism investments in the coast, poor dissemination of the
legislation to local communities, deficient community consultation processes, dispute over
boundaries between communities and investors and non rigorous delimitation of areas (giving
more land than authorized).

However, there are other examples of conflict in decision made by the government and change of
right given to local communities for the benefit of private entities. This clearly contravenes the
policy and the legal framework. Chipanje Chetu Programme in Niassa province is a case in point.
It is a CBNRM initiative facilitated by IUCN with support from Ford Foundation, the
Netherlands government among other donors and fully backed by the provincial government for
6-7 years. In the process the community had acquired land use rights (DUAT), conducted an
inventory of resources (timber and non timber), invested in controlling poaching and widespread


                                                                                                12
bushfires through training and equipment (e.g. bicycles, uniforms, radios, etc.) of community
scouts, initiated income generating activities and had a partnership with a safari company which
was already paying annual dividends distributed between the communities, local and provincial
government as well as meeting part of the technical support hence moving towards self
sufficiency and sustainability. However, since 2004/2005 there was a change, overlap or transfer
of land rights to the benefit of the Lipilichi Wildness. Again the issue how the policy and law are
applied other than disputing the need to bring investors in they genuinely aim to promote
development. This case also illustrates that it is becoming almost a “tradition” for the government
to overrule its decisions and undermine the rights of the local community. It may be right to give
a benefit of doubt and consider that the transfers are done in ‘good faith’ which is to promote
rapid economic growth and creation of rural employment. This is certainly an undisputable and
shared common goal. However, the policy provisions seem to create “an illusion of inclusion” for
the communities who in the last instance they easily loose the rights. Monitoring the tradeoffs and
the impact of these decisions is what constitutes a key missing link.

          The Reforestation strategy: aim, land availability targets
The Reforestation Strategy yet to be approved acknowledges the area with potential for
plantations but also the existing fragile ecosystems, water basins and dunes for conservation. It
states its main aim as to establish an integrated industry to contribute to satisfying the increasing
demand for paper in Mozambique and the world over, satisfy demand for timber as well as
energy. This includes not only wood for domestic consumption in the rural and urban areas but
also for curing tobacco, tea and for the ceramic and bakery industries. The strategy targets to
promote plantations of large and small scale (by communities or outgrower schemes) to the
magnitude of 2 million ha by 2025. It the process about 100 thousand jobs would be generated
and raise almost USD 2 billion for the national economy. Reduction of deforestation of the
natural forests of 20% by 2010 and substitution of 20% the consumption of firewood for the same
period and contribute to poverty alleviation are considered to be the main targets of the
plantations for energy. One important recommendation of this strategy is that a national zoning
has to be undertaken to clearly identify land suitability. Land use planning and zoning has been
discussed in many occasions and over many years and was strongly recommended particularly in
the PROAGRI II (Natural Resources Management component) as an essential step to inform
decision making about land allocation and optimal use. The significance of this recommends is
further enhanced as it is an important tool for the harmonization of the land use planning and
identification of suitable for biofuels productions and other economic activities. There is clearly a
complementary role between the reforestation strategy and the biofuel strategy under
development, but whether the involved in the process take this aspect into consideration is not
clear. A piecemeal land use planning directed to specific activities such as reforestation, zoning of
the costal area for tourism purposes, zoning for biofuels is clearly a ‘waste’ of opportunity to
undertake a comprehensive land use planning which will cost more but the long term benefits will
definitely payoff.


     3. 3.3 Water, agriculture and the environment
Water
Similarly to land, forestry and wildlife, the water resources belong to the State, which reserves the
rights to license the use and the margins of the rivers are subject to partial protection as stipulated
in the land legislation.

Water and sanitation is still one of the main challenges that the government has to address and
many rural communities have limited access to clean drinking water. While there are different
water requirements for different crops used as raw materials for production of biofuels, water


                                                                                                    13
availability is a critical aspect in the identification of areas suitable for establishing the plantations
and the processing plants.

The Water Law (No 16/91) states that: (i) the available water should be used rationally to meet
the demand by the local population and for economic development; (ii) the use of water for
agricultural, industrial and for generation of hydro-electricity has to be regulated; (iii) the water
supply for domestic consumption and sanitation is of utmost importance and priority in relation to
any other uses; (iv) the use of water for private purposes in detriment of meeting demands of the
local population should not be authorized; (v) water for irrigation should be used intensively
maximizing its value and reduce losses; (vi) the industrial water users should ensure maintenance
of quality, minimize pollution and in case that this happens they should observe the polluter’s pay
principle.

The observation of the rights of the different users of water is of paramount importance in the
process of decision making on land allocation. The location of PROCANA, for instance, near the
Massingir Dam in Gaza and close to the tributary of the Limpopo River is strategic. The aim is to
satisfy the water demand for sugar cane and other feedstock. This phenomenon is common. The
existing and planned sugar producing companies are in areas with easy and abundant access to
water. Examples include two sugar companies in the Incomati River in Maputo, the Buzi River
and Zambezi in Sofala as well as many rivers distributed along the areas that Eco-energia is
aiming to use in Cabo Delgado. The interview with the managers of Eco-energia indicated that
the selection of Cabo Delgado (Figure 2) is related to the availability of water and land besides
the good climate conditions all of which are conducive for sustainable production of biofuels
without affecting the biodiversity. The investor maintains that will use degraded lands, will use
crops with limited water requirements (Sweet Sorghum) and use of water efficient irrigation
techniques. However, the company also plans to construct water retention infrastructures such as
dams to be used also for generation of electricity. As it will be shown later, the Ministry of
Housing and Public Works that host the water directorate is conspicuously absent from the inter-
ministerial committee on biofuels.

Agriculture policy
Mozambique is an agricultural based economy and this supplies nearly 100% of rural
employment. The government of Mozambique places high priority to this sector as a vehicle to
addressing the challenges of food insecurity, malnourishment and poverty. The Agricultural
Policy has the following four main areas of intervention: (1) food security, (2) sustainable
economic development, (3) reduction of the unemployment rate, (4) and poverty reduction.

Mozambique has developed the second generation of the Agricultural Sector Investment
Programme known as PROAGRI containing strategies and specific intervention areas in the
sector to deliver on the policy objectives. Within that context, PROAGRI is part of a broader
perspective to improving agriculture as well as endow the majority of the households, particularly
rural households with the necessary means to pursue the goals of reducing poverty and food
insecurity (MADER, 2004). Therefore, the objective of PROAGRI II is to contribute to the these
two goals through the support of the smallholder and the commercial farmers to increase the
agricultural productivity, stimulate the agri-processing industry and commercialization of the
produce. The program also emphasizes the need to ensure sustainable use and management of the
natural resources. While the smallholder farming sector is considered to be rich in diversity of
land sizes, crops and final use of the produce, the commercial farming sector was defined as “The
Front Runners for Agricultural Development”. For both categories the major areas of support
include markets, provision of financial services, technology, markets and access to natural
resources.


                                                                                                       14
A major component of the biofuel production comprise of agricultural activities for production of
feedstock, hence the potential to contribute or undermine the efforts to expand the commercial
farming sector as well as ensure that high potential land for food crops is actually allocated to that
purpose.

Environmental policy
The government of Mozambique has defined important tools to ensure that economic activities
adhere to in order to guarantee the environmental sustainability of their businesses. The Decree
No 45/2004 substituted the Decree 76/1998 regulates the process of Environmental Impact
Assessment; the Decree 130/2006 regulates public participation in the evaluation of the studies
and monitoring the implementation; the Decree 129/2006 provide general guidelines for the EIA
studies; and, the Decree 32/2003 focus on Environmental Auditing. Therefore, the environmental
legal framework offers a comprehensive set of process and opportunities for adherence to
acceptable environmental standards and for monitoring the implementation of the plans of
environmental management. However, the limited resources disposable to the government
constitute an obstacle for efficient implementation of environmental safeguards.

The Decree 39/2003 for industrial licensing classifies the industries in four categories defined
according to the level of investment. The micro-industries are defined as those with less than
USD 25 thousand investment and less than 25 employees while large scale industries have more
than USD 10 million investment and more than 250 employees. The Regulation of the EIA also
defines categories of investment requiring different levels of detail of analysis of their impacts for
environmental licensing and monitoring. The categories A and B are expected to result in
significant impact on fragile ecosystems such as protected areas, natural forests, wetlands,
investments that may require resettlement of populations, areas with high demand for land and
conflict over use and users, areas along rivers and other inland water courses that sustain people’s
livelihoods. Therefore, they require detailed EIA studies and monitoring process and the
difference between A and B is simply in the scale of the impact. Agriculture activities under
category A include investments in cropland of more than 350 ha for irrigation and over 1000 ha
for rainfed agriculture; conversion of agricultural land, introduction of new or exotic species.
Energy related initiatives falling in the same category (A) do not include an explicit reference to
biofuels, however the storage of any liquid fuels is deemed to warrant a comprehensive EIA.
Therefore, given the scale of production of biofuels by large companies in terms of area,
requirement of water, possible harvesting of natural vegetation and use of agrochemicals, etc. an
environmental management plan should be developed and strictly monitored.

The investments under Category C are considered to cause negligible or non-existent negative
environmental impacts. This may include irrigated agriculture of less than 100 ha or clear-cutting
of natural vegetation in less than 200 ha. Again here in most cases what is crucial to look at
cumulative impacts of many, small continuous activities. This is likely to be the case of the
outgrower schemes either for producing sugar, biofuels feedstock or any other activity.

The major concerns of the environmental authorities include the quantity of water likely to be
used in the production of biofuels and possible competition with water requirements for food crop
production and consumption of humans and domestic animals. The discharge of effluents may
damage the quality of soil and water resources hence affecting the aquatic life; the apparent
limited access to information on associated socio-economic and environmental costs and benefits
influence negatively the process of consultation of the local communities. In order to have clear
guidelines on environmental management, a comprehensive zoning and strategic environmental



                                                                                                   15
assessment would be a useful complementary instrument to current efforts to zone areas that can
potentially be used for biofuels.
During the visit to the Ministry of Environmental Affairs it was possible to search for EIA study
reports that might have been submitted during the last years either for expansion of areas of
cultivation of sugar cane by the companies currently operating in the country or related to new
investments in the area of biofuels. It was not possible to find the EIA of PROCANA investment
as the first ever large scale producing company formally approved to operate as such. This would
have shaded some light on how detailed the studies are and what are the environmental concerns
being raised as well as the mitigation measures envisaged. However, two studies on
environmental pre-viability analysis for expansion of two sugar companies in the Maputo
province (Açucareira de Maragra and Açucareira de Xinavane) were identified. Further, two EIA
studies for Açucareira de Moçambique one concerning the expansion of the area of production of
sugar cane and the processing plant in Sofala province. The common issues rose in the case of
Maputo (Impacto, 2006, 2007) that need attention and detailed study in the EIA include:
          Water pollution including risk of contamination of ground water due to use of
          agrochemicals (fertilizers, pesticides, herbicides etc.) in the process of sugar cane
          production.
          Conflict between the various users of water along the Incomati basin where many small
          and medium scale agricultural activities are taking place as well as the two sugar
          companies.
          Land use change and degradation of habitats.
          Air pollution.
          Contamination of soils due to poor management of solid waste, oil, lubricants and fuel
          used during the process of production.

    The environmental impacts identified in the above case are also similar to those identified in
    the case of establishment of new areas of plantation of sugar cane in the Açucareira de
    Moçambique (CEPLAGA, 2006). The additional impacts observed in this case (detailed EIA)
    include soil erosion, obstruction of drainage canals due to sedimentation, change of water
    table level, proliferation of diseases and plaques and water borne diseases due to water
    contamination. In the case of the sugar production plant the environmental impacts include
    also water, soil, air and noise pollution (CEPLAGA, 2007). Overall the studies indicate
    positive socio-economic impacts particularly the generation of employment and provision of
    some utilities such as water and electricity to the employees. However, in the case of the
    Maputo sugar companies, particularly Maragra a socio-cultural impact highlighted the
    possible proliferation of HIV/AIDS as a result of improved economic conditions which lead
    men to become polygamous. This aspect deserves an important consideration in all new
    investments in biofuels where migration may be stimulated particularly due to large scale of
    some investments that cannot be sustained by local labour (unskilled) but also due to the
    necessary migration of skilled workers.

    The examples of studies here presented give an idea of whether the legal provisions are being
    observed or not. As usual the major policy challenge lies on monitoring implementation as
    there is tendency for investors to comply with requirements for producing management plan
    solely to ascertain the issuing of licenses to operate.

    The international pressure for meeting acceptable standards in the process of production and
    marketing of biofuels is likely to play a key role in implementation of environmental
    safeguards. The European Union developed an Energy Policy which will determine the
    penetration of biofuels in that market. Mozambique has been analyzing the EU environmental
    indicators and a seminar was organized to discuss the ‘domestication’ and harmonization of


                                                                                               16
    the sustainability criteria with local legislation. The EU standards include the following
    principles for biofuels production: (i) positive greenhouse gas balance of the production chain
    and application of biomass; (ii) minimum impact of biomass production on important carbon
    sinks in both vegetation and soil; (iii) production of biomass should not compromise food
    security and other needs such as energy supply, medicines and construction materials; (iv)
    minimum impact on protected biodiversity and rather strengthen it where possible; (v)
    maintain or improve the quality of soil in the production and processing of biomass; (vi)
    minimize the depletion of surface and ground water and maintain/improve water quality; (vii)
    improve or maintain the air quality in the process of production and processing of biomass;
    (viii) production of biomass must contribute to improvement of local livelihoods; (ix) ensure
    contribution towards the social wellbeing of the employees and local population. These
    principles are of interest of both the government and also the private investors in order to
    ensure that the use of resources in the country will result in positive contribution to poverty
    reduction, economic growth and environmental sustainability.


    3.4 THE INSTITUTIONAL ARRANGEMENT FOR PRODUCTION OF BIOFUELS (RESEARCH,
        PRODUCERS OF LARGE AND SMALL SCALE, SUPPORT SERVICES, INCENTIVES)

The institutional arrangement is of paramount importance given the complexities of the
production of biofuels. As discussed in the previous sections many resources are likely to be
impacted on, positively or otherwise. Land, food security, water, environmental impacts of the
processes of production of raw materials, processing and transportation, creation of employment,
disruption of socio-economic cohesion due to need for resettlement of communities among
others.

There are already existing mechanisms that have been engaging multi-sector stakeholders from
government, from the private sector and NGOs mostly supporting community development and
environmental management initiatives, some of the important institutions include:
        the National Council for Sustainable Development (CONDES) established by the Law
        20/97 as a consultative organ of the Council of Ministers for coordination and effective
        integration of environmental considerations in all development activities in the country.
        Besides providing views on policy matters, the organ was also charged with discussing
        incentives to stimulate the adherence of the economic agents to the principles and
        practices of sustainable management of natural resources and environment in the
        country. The Decree 40/2000 the composition of this organ which include nine
        ministries among which of energy, environmental affairs, public works and housing,
        agriculture and rural development. The civil society, environmental experts and others
        can be invited to participate in relevant sessions. CONDES is presided by the Prime-
        Minister.

This is indeed well placed to discuss high policy level issues such as the biofuels policy, strategy
and action plan.

         The National Council of Water created by the Law 16/91 is charged with among others,
         the task of informing the Council of Ministers regarding any ‘…critical and recurrent
         aspects that affect the development and conservation of water resources in the country;
         detect macroeconomic and macro-institutional factors that affect the development and
         use of water resources”. The same law creates the Regional (South, Centre, Zambezi and
         North) Water Administration Authorities which are responsible for approving
         concessions and licenses for water use rights and discharge of effluents, manage water


                                                                                                 17
         allocation and minimize conflicts over use. Furthermore, the Scientific Council of Water
         presided by the Ministry of Science and Technology was established in 2004/5 to
         provide leadership in the research and policy analysis of water resources.

With this institutional framework there is a strong basis for coordination, analysis of possible
macro-scale impacts of water use in the country and advice the government on land allocation
and approval of investments on biofuels.

         The government has created an inter-ministerial biofuels (technical) group comprising of
         the energy, agriculture, industry and commerce, science and technology, environment,
         finance, sustainable development council (CONDES), investment promotion (CEPAGRI
         and CPI) as well as the oil distribution (PETROMOC) and electricity (EDM) supply
         companies. The existence of this commission and working groups on development of
         raw materials, sustainability criteria and development models, legal and fiscal
         framework and project evaluation is essential for coordinating policy development
         issues, research needs as well as overall development potential. However, it will be
         important in the context of the current study to examine the extent to which the concerns
         over the involvement of local farmers to ensuring equitable participation and benefit
         sharing are discussed.
         FUNAE is a National Fund for Energy which supports projects of alternative sources of
         energy such as biogas in Maputo as well as supporting the development and adoption of
         technologies at local level.

The major gap7 in this institutional arrangement is luck of explicit integration of the National
Water Council or the National Directorate of Water and key civil society representatives dealing
with conservation of resources, support of local development and also the association of the
private sector for environmental management. It is important to have such a multi-sectoral
institution to bring perspectives on costs and benefits as well as perspectives of existing and
potential interested and affected parties.

         Civil society organizations concerned with sustainable management of environment and
         natural resources as well as monitoring of implementation of macroeconomic policies
         and programs such as the poverty reduction strategies are critical to keep a watch on
         development of biofuels in the country and its impacts.
             o FEMA is a private sector forum for environmental management. It has been
                 playing a key role in assisting its membership to adhere to international
                 environmental standards, to attain the appropriate certification of products, it has
                 promoted the engagement of the private sector in corporate social responsibility
                 and brought examples from other parts of the world to demonstrate how that
                 pays (as profit it is the main driver of the investors), and recently commissioned
                 a study and organized a seminar on biofuels. In the seminar some rather
                 pertinent issues were raised. For example, the land availability for food and
                 biofuel crops, analysis of varieties of crops (such as jatropha, sunflower, soy,
                 African palm for biodiesel and cassava and sugarcane for biofuels) adapted to
                 the different ecological zones and a critical analysis on possible competition for
                 water resources. There was a strong call for clear definition of targets, analysis
                 of possible competition of labour8 availability for food production, production

7
 As far as the field study could establish
8
 Although there is apparently high level of employment, it is important to consider that in some sites there
may actually be shortage which will require migration of workers from other sites. The Ministry of


                                                                                                          18
                  of cash crops such as cotton, tobacco and others and, the labour demand for
                  biofuel; utilization of the marginal and degraded areas for plantation of biofuel
                  crops to have a net positive impact in the sequestration of carbon. This forum is
                  also part of the World Council for Sustainable Development, hence constitute an
                  important party and partner that the government ought to bring on board on the
                  policy discussions.
              o   G20 is a forum of NGOs working on land rights, local development and other
                  areas. This forum has been monitoring the implementation of the PRSP in the
                  country and can be very instrumental in monitoring the poverty and
                  environmental goals in the context of biofuels.
              o   CBNRM forum, Friends of the Forest and other conservation organizations such
                  as IUCN and WWF have been playing a key role in the processes of formulation
                  and implementation of policies for engagement of communities in natural
                  resources management and also in the establishment and management of
                  protected areas (fragile ecosystems such as wetlands and overall conservation of
                  biodiversity).

The civil society is a very important partner who actually contributes significantly to the delivery
of the policies at local level. Therefore, it should participate in the development of the biofuel
policy and strategy as it can also bring field level concerns as well as playing a role in
information dissemination and monitor the impacts on the ground.

         Training and research institutions particularly the Eduardo Mondlane University play a
         key role in the generation of knowledge. Some of the research gaps include the overall
         (realistic) trends in consumption of biomass energy and fossil fuels in the country and
         alternative energies, analysis of land use cover change, technologies for improved
         efficiency of use of biomass. The university has started to work studies related to biofuel
         production in the country. Currently, the Faculty of Agronomy and Forestry Engineering
         is engaged in various aspects of research such as the case of pests and diseases
         associated with jathropha which can affect other species of the genera Euphorbiacea.
         The Faculty is collaborating with Wageninger University in a one year regional research
         initiative to analyse the interaction between production of biomass and change in use and
         land cover as well as the economic impacts. Another initiative, involving the above
         mentioned institutions and the University of Viçosa in Brasil, is a four year research to
         develop production and processing models as well as scenarios of socio-economic and
         environmental implications. The Faculty of Engineering, Chemistry Department hosts
         the President of the Scientific Council of Energy who is part of a working group that is
         to undertake studies in the different provinces. This Faculty is primarily responsible for
         the industrial component of biofuels production, mostly research on technologies for
         small scale production (gasification of carcasses of coconut, water from wood and
         cashew nut processing; biogas, improved stoves for utilization of biomass energy, etc.).
         The Faculty of Engineering has also engaged in collaborative research with the
         University of Dar es Salam in a SAREC supported programme. In addition, a high level
         training programme to build capacity on research of various technologies for production
         of alternative fuels is being implemented. The International Institute of Tropical
         Agriculture is also working with the Mozambique Institute of Agriculture Research
         (IIAM) on the improvement of cassava for production of biofuels.


Planning and development is also conducting a study using a General Equilibrium Model to establish the
impact of biofuels in food crop production including an analysis of the marginal productivity of labour.


                                                                                                           19
This shows that in as far as research is concerned, there are a number of ongoing initiatives, but
whether there is coordination and focus on applied science is not clear.

At this stage of establishment of a policy framework and instruments to regulate this emerging
area (in the national context) it is imperative to bring in a large spectrum of institutions. The Box
3 below highlights some of the critical links that should complement the inter-ministerial
committee on biofuels.


        Box 3 The missing/weak links in the institutional framework



               Ministry of                  Ministry of             Environment, CONDES
               Agriculture                  Energy                  and other ministries




                             Biofuels Inter-ministerial Committee




          Civil Society          National Council of Water          Research institutions




         The external players comprise of donors facilitating or supporting the policy
         development and various investors seeking to explore the opportunities particularly the
         apparent existence of large tracks of ‘unused’ land in Mozambique. The donors currently
         involved include the World Bank, the Italian government, the German government
         through GTZ, the Netherlands, the EU and the Finnish. The initiated (April 2008) a
         study in Mozambique and Zambia to look at the prospects for implementing the Mbono
         (Jatropha curcas in Kiswahili) Concept in which Preseco Ltd can form
         partnerships/interventions in the region (including Kenya, Tanzania and Uganda). The
         objectives of the study include an analysis of ecological, technical and socio-economic
         information in the countries as well as study and develop alternative concepts for bio-
         fuel production and export. The interests in this area include companies from Great
         Britain, Spain, Portugal, Brazil, India, South Africa, Scandinavia, Italy and Canada.
         These institutions have an important role to play in guiding the process in terms of
         observation of social and environmental ethics in the production of biofuels and in fact
         should contribute to ensure that adequate legislation is in place before occupying large
         extensions of land. Although it seems too much to expect investors not to explore the
         weaknesses in the system to acquire resources but the external market and the
         enforcement of certification of the produce as well as intervention of the civil society
         should stimulate the investors to comply with norms and good practices.




                                                                                                  20
    4. BIOFUEL PRODUCTION INITIATIVES IN THE COUNTRY: BUSINESS FOR LARGE AND/OR
        SMALL SCALE PRODUCERS?
    4.1 COMPANIES WITH BIOFUELS AS THEIR MAIN BUSINESS

Since the government campaign for introduction of Jatropha in the country, many investors
largely from Europe have flocked the country to prospect opportunities for production of
bioenergy including biodiesel and bioethanol. Currently the official information indicate that
there are more than 152 thousand ha corresponding to 9 companies in the provinces of Maputo,
Gaza, Inhambane, in the South and Manica and Sofala in the centre of Mozambique. These
investments
in the processing phase comprise of 38% of the area for production of Jatropha (for biodiesel) and
62% for sugar cane (for bioethanol). The manifestations of intention to invest reach about 2.7
million ha (Albino, 2008) by 28 companies of medium and large scale. Some of the investments
have been approved by the Centre for Promotion of Investment (CPI) but are pending approval on
land allocation due to the need for zoning or the land allocated has been significantly reduced.
There are various aspects being observed in the demand for land for biofuels. For example, there
are requests of land use change from production of tobacco or cotton, or request of productive
land for agriculture to plant Jatropha which is deemed to be appropriate for agriculture marginal
areas, request of large areas which include infrastructure such as schools and clinics.


PROCANA
According to Biopact web site “Pro-Cana is a private company with British interests set to invest
US$510/€375 million for the construction of a plant for the production ethanol, sugar, electricity
and fertilizers in the district of Massingir, in Mozambique's southern province of
Gaza.“ Although the initial intent was to produce around 600 thousand m3 of bioetanol, the raw
material is estimated to be sufficient to produce of only a third of that output. This initiative is
also of interest for this study as it shows a clear land use conflict as well as undermining
community rights to land as earlier discussed. The Box 1 shows the expectations or potential
benefits of production of biofuels in Gaza province by PROCANA.


 Box 4 Background on the company (PROCANA) and envisaged benefits (source: Biopact web site)

     o    Procana is the first to build a large integrated fuel-food-fertilizer plant in Africa
     o    Company owns an ethanol plant in Brazil.
     o    Gaza province is expected to be able to support the production of around 220 Petajoules of biomass energy
          in a sustainable manner (i.e. without deforestation and without impacting local food, firewood, fodder and
          fibre supplies);
     o    Besides biofuels and sugar, the new plant will generate electricity from bagasse, a byproduct of sugarcane.
          This would enable to decrease the consumption of power generated at the Cahora Bassa Dam, which could
          eventually be exported to other countries in the region such as Zimbabwe, South Africa, Swaziland, Malawi
          and Botswana.
     o    The project in Massingir (Gaza province) involves the establishment of 30,000 hectares of sugar cane,
          besides other infrastructures that will benefit the local communities.
     o     Employment creation – Procana expected to generate in its first stage at least 7,000 new jobs for the people
          of Massingir and surrounding areas, and "therefore it is welcome, as it will contribute largely in the fight
          against poverty in Mozambique".

 “It is beyond any doubt that production of ethanol is one of best opportunities for the country. [...] We want to
 diversify our economy because we don't want [...] to depend on just four major products of export. We would like to
 contribute with some other products, such as alcohol. We can also contribute with the export of electricity, as the
 sugar mill could also generate electrical power and sell it to the domestic market. - Mozambique's Agrarian
 Promotion Centre spokeperson.”                                                                                 21
SEKAK or Eco-energia
Eco-energia or SEKAB is one of the prospective large companies for production of biofuels both
in terms of area (1209-150 000 ha) and the scale of the processing (3 to 6 units) as well as the
market. 85% of the production will be exported to Scandinavian countries and negotiating a
Memorandum of Understanding (MOU) with the Ministry of Energy to supply the domestic
market through PETROMOC. This company represents a Swedish company with long tradition
in production of ethanol a process that has started in the early XIX century (1909). They intend to
carry out production in non-contiguous areas covering seven districts in the province (Figure 2).
The company has been undertaking extensive studies in the area: socio-economic, ecology and
environment, soils, infrastructure development such as dams and reservoirs for water and
generation of electricity.


    4.2 SUGAR PRODUCTION COMPANIES: PRODUCT DIVERSIFICATION AND EXPLORATION OF
    EMERGING MARKETS

The increase in demand for production of bioethanol and traditionally sugar producing companies
are also planning to or already exploring this new opportunity. According to Biopact web site
“Currently, the Mozambican authorities are in the process of expanding the sugar industry in
Mozambique to diversify the country's economy. In 2006, the Mozambican sugar industry
achieved the highest production of the last 30 years, by producing 300.000 tons in the existing
four plants currently operating in the country, namely Marromeu and Mafambisse, in the central
province of Sofala and, Maragra and Xinavane, in the southern province of Maputo”. Further the
Ministries of Energy, Trade and Agriculture are engaged in discussions and coordination for
production of biofuels particularly ethanol and to explore the potential for producing electricity.
The next section gives some details on what is happening as far as ‘biofuels movement’ is
concerned.

    4.2.1 Production of biofuels: are there any prospects in the Zambezi Delta?

According to the provincial authorities of agriculture and forestry in Sofala there are many
manifestations 10 of interests by investors to produce biofuels in the province. However, they
reiterated the importance of the conclusion of the zoning exercise and its approval by the Council
of Ministers to ensure that allocation of land is only in the marginal (in terms of soil and also
rainfall) areas for food crop production. However, the authorities are also wary of the fact that
cassava is an important crop in the diet of the population and one of the crops that withstand poor
soil and limited water. This conflicts clearly with the areas that are deemed adequate for Jatropha.
This crop is also known to be a host of a virus (mosaico) that attacks cassava and that certainly
holds a potential negative impact on food crop production.


9
  Planned maximum transportation distance of 30 km to the ethanol processing plant to minimize transport
costs and ensure efficient supply of raw material
10
   Dono district (Elaion -1000 ha already being explored for jatropha and cassava), Cheringoma (Mozamba
and Gruja) – 20 000 ha for Enerterra and 10 000 ha for Niquel Lta already approved, Envirotrade is
working with communities in carbon projects and is conducting a trial of mixed cropping of jatropha with
food crops in Nhambita.


                                                                                                      22
The provincial authorities also added that Sofala province hosts important resources such as
forests, wildlife in protected and outside protected areas and more importantly in relation to
biofuels the province has wetlands of international importance (the Zambezi Delta or the
Marroumeu-Cheringoma) with a rich habitat for flora and fauna. Therefore, these areas would not
be recommended for biofuel production. However, there are requests for land in Chemba along
the Zambezi Basin for cultivation of sweet sorghum in 15000 ha. The plantation will be in
clusters of small acreage to minimize the interference with other activities and health of the
wetland. It is important to note that Sofala province is deemed as one of the few provinces that
have a history of strong and firm agriculture sector authorities who put the law and the technical
viability in the decision making process. Will they withstand the pressure on land for biofuels?

The Zambezi delta was a central area of interest for WWF (TOR) for effects of comparability of
activities along the Zambezi basin with Malawi and Zambia. The current scale of biofuel
activities particularly does not seem to be significant at this stage. It is important to bear in mind
that the pressure may increase as from when the policy, the strategy and the zoning plans are in
place.

Açucareira de Marromeu (Zambezi Delta) is one of the largest sugar companies in the country
and it currently employs about 8 000 people and the company uses about 2.5 million liters of oil
per annum in the production process, import of inputs and export of the final product. The
company intends to invest about USD 10 million in biofuels mainly from reduction of the current
export of molasses for production of ethanol. The objective of such undertaking is mainly to
blend with fossil fuels and reduce the production of the company. They consider Mozambique
one of the expensive countries for business particularly the logistics for export and the scale of
production (if they embark on it) would not justify the export costs. The additional line of
production would not add significantly to the social benefits as the new jobs are likely to be as
few as less than a 100. Currently the company has no out-grower schemes although it might
consider doing so in future.

On the contrary, the Açucareira de Moçambique (Mafambisse, Dondo District) has requested an
expansion of the area (to 7 000 ha)of plantation of sugar cane with the aim of increasing the
production of sugar from the current 60 thousand tons to 360 thousand tons (2009/2010). Of this
only about 400 ha will be allocated to outgrowers. Similarly to the Açucareira de Marromeu this
company awaits a clear government policy and strategy to decide on whether and when to embark
on production of bioethanol. The EIA for this expansion was discussed in the previous section.


    4.2.2 Production of Biofuels: some examples elsewhere in the country

Some sugar companies have requested expansion of their areas allegedly to increase sugar
production. It is not clear yet whether this is also a security measure to ensure availability of raw
material for diversification of production to biofuels in future.

The Tongaat Hulett’s company (South African) which is the owner of the Açucareira de
Xinavane (Maputo province) and Açucareira de Moçambique (Mafambisse, Sofala province)
sugar companies besides other investments in South Africa, Swaziland and Zimbabwe defines its
strategic platform to increase sugar production capacity from 1.119 million tons in 2007 to about
1.945 million by 2009. The current expansion in Mozambique investment (Xinavane and
Mafambisse) will cost R1.3 billion (or USD 185.714 million). The main markets aimed at include
the EU in the initiative ‘Everything But Arms’ (EBA) and the USA under AGOA scheme. The
production capacity is expected to increase from 156 to 286 thousand tons of sugar in 2009 and


                                                                                                   23
320 thousand tons in 2010 corresponding to additional 2555 ha of land. Other sources of
information indicate that the Açucareira de Xinavane has currently 5 474 ha of land of which 500
ha are cultivated by smallholder farmers and 1500 ha by a private company supplying sugar cane
to the company. The additional area cover 5800 ha of which only 5300 ha actually be planted.
The additional area is transacted from a former cattle farm which has been lying idle11 since the
advent of the war.

On the one hand, the increase in production is driven by increased attractiveness of the market
such as the doubling of EU imports to 3.5 million tons per year once the new economic
partnership agreements enter into force from late 2009. However, the company also
acknowledges the opportunities offered by the emerging need in Southern Africa for increased
realization of bagasse, molasses and other sugar cane biomass for generation of electricity and
bio-ethanol production. The free access to EU market is a particular attraction for the company to
produce biofuels from Mozambique and the Xinavane expansion is particularly to capitalize on
that opportunity. The same source indicates that the potential generation of 660 MW of electricity
could result in a positive environmental impact. It would mean saving 2 million tons of coal
annually and reduce CO2 emissions by 2.25 million tons. However, there is an increasing concern
over the use of food crops such as maize for production of biofuels. In fact, the high prices of this
cereal over the last three years have also been driven by its use for biofuels production. For
example, safeguarding for food security the government of South Africa despite approving a
biofuels industrial strategy in December 2007 which targets an initial use of 2% (or 400 million
litters per annum) over the next five years, it has explicitly excluded the use of maize as raw
material for biofuels (Tongaat Hulett, 2007).


     4.3 BLENDING, STORAGE AND DISTRIBUTION TO LOCAL AND EXTERNAL MARKETS

PETROMOC is a public limited liability company with the State controlling 80% of its shares. It
has the largest network of distribution of oil products with 119 filling stations and 118 local
consumers; it has warehouses and pipelines (Appendix 2). Its storage capacity is about 500 000
m3, with annual sales of about 333 thousand m3 for the domestic market with 34% participation
and 93 thousand for foreign markets. Besides supplying the major industrial and commercial
sectors in Mozambique also supplies fuels to Zimbabwe, Zambia, Malawi and Democratic
Republic of Congo. The company is equally involved in the search for alternative sources of
energy such as biofuels. The motivation is to reduce the current oil shock. Such engagement is
considered to provide socio-economic benefits for all participants in the production chain,
reduction of greenhouse gas emissions, progressive replacement of imports of fossil fuels and
increased export of biofuels as well as contribute to what is considered ‘indisputable perfect
vector against poverty and promotion of the Made in Mozambique products’. Therefore, the
company sees itself as a key player particularly as regards the logistics of biofuels (PETROMOC,
undated).

PETROMOC (2008) presents its development strategy which prioritizes biofuels to mitigate the
expenditure on the import of fossil fuels which has increased in a five year period from USD 45
million to USD 600 million, promote economic development and contribute to environmental
sustainability. The company is involved in various partnerships to develop additional combined
storage facilities to over 2 million m3. The company is part of a multi-sector task force set up by
the government following the 2005 national workshop on biofules. The task force is charged with

11
  Part of the area was under cultivation by local farmers. They were asked to vacate the land after harvesting their
crops


                                                                                                                       24
collecting and collating information for the preparation of the National Biofuels Strategy.
PETROMOC is the ‘operational vehicle for the overall Government strategy on biofuels’. The
corporation has partnerships with various companies aiming to produce bio-diesel from crops
such as Jatropha curcas, Trichilia emetica and it is also forming partnerships to carry out
research and development of a hybrid of sweet sorghum and local varieties. However, substantial
partnerships include seven companies which are likely to occupy a total of 300 out of 54812
thousand ha of biofuel projects in the provinces of Maputo (Xinavane), Gaza (Massingir), Sofala
(Buzi and Caia), Cabo Delgado (the largest initiative of 150 000 ha in clusters distributed in the
districts of Ancuabe, Balama, Chiure, Montepuez and Namuno). The combined production
capacity of ethanol of these companies is in excess of 1 million m3 per annum (i.e, 10 times more
than the domestic market can currently consume). These initiatives involve large amounts of
investment. For example, three of the companies (in Massingir, Buzi) are claiming to invest over
USD 1.158 billion. The role of PETROMOC in the various partnerships includes progressive
blending with respective fossil fuels, transportation, handling, storage and distribution of biofuels
in the domestic markets.

PETROMOC is also a shareholder in the Ecomoz (Renewable Alternative Energies Ltd)
company which has a biodiesel plant with capacity for producing 40 000 m3/annum. The
company is already producing biodiesel from coconut oil supplied from Inhambane province.
Almost a year after starting production, the plant is already facing shortage of raw material
(PETROMOC, 2008). It should be noted that the coconut has traditionally been processed into
copra for production of soap and cooking oil and coconut milk which is an important ingredient
of the coastal cuisine. Therefore, a steady supply of coconut to this new industry would require
expansion of the plantations or deviation of the habitual use for biofuels. This is likely to compete
and impact on the local consumption, raising again the question whether the crops should be for
running cars or feeding people. The strategy of Ecomoz is to offset this is to engage in the
development of projects for production of oil baring crops, stimulate participation of the rural
communities in production and commercialization of vegetable oil and imports of vegetable oil.
The latter option brings challenges as regards the prices and competitiveness of the final product
to the local and international markets.

The examples here presented show the scale of production that is being envisaged, particularly in
as far as land demand is concerned and proportionally this is likely to have significant impact on
the land tenure security for the rural communities. Further, water demand for irrigation of large
scale production of crops for biofuels needs attention in order to establish the potential impact on
agriculture production.


     4.4 WHERE DO OUTGROWER AND SOCIAL BENEFITS FEATURE IN ALL THIS?

One of the main objectives of this study was to look at the level of involvement of the small
growers and how integrated they are in the biofuel production chain including micro-initiatives
that they could run on their own. Therefore, evaluating economic and financial potential and the
role of community participation on energy strategies, poverty reduction and impact on the
environment was considered to be an important aspect to shed a light on. However, from the field
study it was only possible to have some general information on the small scale activities being
undertaken in different parts of the country for the production of biofuels. Some initiatives
mentioned include: (i) the South African farmers that settled in Niassa province introduced the

12
  All statistics in this paragraph are author’s estimations based on information presented in Petromoc
(2008).


                                                                                                         25
production of vegetable oil for running the farm machinery and cars; (ii) in Manica there are
plantations of jatropha and coconut for producing biodiesel at small scale used for runing the
farm equipment; (iii) in Tete, Nampula, Gaza, Sofala (in the Gorongoza region) and Inhambane
are other provinces engaged in the production of jatropha at small and medium scale; (iii) the
PETROMOC initiative of production of biodiesel from coconut has been relying on two major
areas of supply which are Inhambane and Zambézia provinces. These two provinces have been
traditionally centres of large areas of production mainly owned by small holders in a programme
that has been well integrated with copra processing. However, the crop has been for the past
decade affected by a disease that is decimating many trees or reducing significantly their
productivity. The biodisel initiative was started gain without a proper integration with the
production of raw materials to ensure quantity, quality and competitiveness in relation to other
uses of the same crop.

As mentioned earlier the local people were the main target of the initial wave of biofuel
production when massive political campaigns were undertaken by top level political entities.
They mobilized the engagement of smallholders in jatropha production. Jootse (2003) illustrated
the potential benefits of jatropha (control of soil erosion, oil – lubricant, soap production,
biodiesel, etc. - hedges, medicinal, honey, etc.) and recommended that there be a central
processing facility for farmers to deliver the seen and enumerated a set of socio-economic
benefits of the same. However, luck of clear strategy in the development of local capacity for
production and introduction of simple technology for processing and marketing of jatropha are
behind the desolation of the farmers today: anecdotic evidence shows that communities in some
districts have been so frustrated by the bumper seed crop that they harvested and took it to the
local administrations.

It is important for the authorities and all involved in facilitating the production of biofuels at
small scale to undertake a thorough investigation of the potential and costs and benefits at
medium and long term. It would be interesting for this study to have been able to bring such
information; however the scope and time allocation could not permit a detailed application of an
analysis of financial and economic viability of production of biofuels at small scale. Nevertheless,
the Boxes 5 and 6 provide two examples of associations of sugarcane producers located in the
District of Manhiça (Xinavane) who are involved in the supply of raw material to the sugar
company. One important aspect to note is that despite the fact that the company is planning to
produce biofuels, these farmers were not aware (May 2008). One of the groups however, has
questioned the company regarding the need to add value on the price of sugar cane considering
that this produces sugar as well as molasses and bagasse which is used for generating energy,
hence with a market value. There was no clear indication on whether the company was to pay a
higher value for the produce. The market arrangement is such that there is dependence of the
association in relation to the sole buyer reducing their bargaining power. However, there is
indication that farmers are already aware of the value of the crop and certainly the diversification
of production should also reward the farmers.

Both associations are formally registered as such following the law of association which
establishes the structures such a director, treasurer, assembly among others to ensure formal and
transparent operations. The involvement of smallholders in the production of biofuels feedstock is
likely to yield benefits in combating hunger and poverty. However, different scenarios need to be
analysed as regards the size of land holdings (e.g. 3, 5, 10); the family labour structure,
possibilities and implication of labour hiring in engagement of more commercial and higher
return endeavours, source of financial support among others. In addition, the cumulative
environmental impact would have to be analysed more closely. This could only be done with a
specific focus on the smallholders from a selection of sites and for different crops.


                                                                                                 26
 Box 5 Experience of Maguiguane Association of sugar cane producers in Xinavane

 The association was established in 1999/2000, it has 66 members and a total area of 84 ha; each
 member has an individual plot and they all produce collectively in 6 ha for meeting the costs of running
 the association including the payment of the technical assistance, water, irrigation equipment,
 agricultural inputs, running costs of the office among others. They have had a contract with the
 Açucareira de Xinavane for 9 years now and the duration is undetermined. The contract establishes that
 the company facilitates the acquisition of all farm inputs and equipments and farm equipment, once the
 produce is harvested the company keeps up to 30% of the association’s revenue to meet the costs of the
 services rendered to them. In 2007 they produced 7218 tones of sugar cane. In 2006 each member
 received 23 million Mt which is equivalent to about (USD 950) or about USD 805/ha after deduction of
 all costs. In 2007 the revenue increased to 33 million Mt or USD 1375 per member and this is expected
 to be around 1600 by the end of the current harvesting season. The members of the Board of Directors
 (7 people) have an additional income of USD 750 per year given as subsidies for the time spent dealing
 with association matters. The association also has invested in a chicken farm, opened a borehole
 supplying potable water to the community in the vicinity. Other benefits include contribution to local
 festivities, funerals but above all the houses of members of the association have been improved (use of
 conventional materials), 30% of which have electricity, they have invested in cattle and kilns for
 production of bricks and pottery.




 Box 6 Experience of the Macuvulane Association of sugar cane producers in Xinavane

 This association started in 1964 as an association for production of cereals and cotton. However, the
 activities were discontinued during the 16 civil war which ended in 1992. The community was also
 affected by the floods of 2000 which inundated the area. The soil continues saturated and it does no
 longer produce cereals. The sugar cane was, therefore, an alternative activity. The association of sugar
 cane producers started in 2005 and it is in the third harvesting season. The association is comprised of
 186 members and covers about 184 ha and around 15 ha that belongs to all members and they cultivate
 collectively. In the last harvesting season the produce reached more than 24,6 thousand tons or about
 131 ton/ha. Each member received an average of 45.4 million Mt equivalents to USD 1892. The
 members of the Board of Directors receive additional USD 1200 per year. The association does not as
 yet have a formal contract with the sugar company although this provides technical support and all
 other inputs and equipment. Up on harvesting the company keeps 45% of the revenue to cater for the all
 the costs of production. The association is also funding some of the inputs/equipments using credit
 given by a local development bank. This association has enquired about the prospects for sharing
 revenue generated from the sugar production by products: molasses and bagasse.


The EU is also exploring the possibilities of supporting the creation of an association of about
200 members to produce sugarcane to supply one of biomass for biofures in Sabie, which is along
the Incomati river basin that supplies water to the Acucareira de Xinavane and Maragra. This
offers an opportunity to identify a sample of involved farmers and conduct a more detailed
viability study.




                                                                                                       27
    5. CONCLUSIONS AND RECOMMENDATIONS OF THE STUDY

This UN framework highlights some of the critical aspects that the governments ought to consider
before embarking in large scale production of biofuels. The Mozambique government certainly
started the process in rather an add hoc manner with a populist mobilization of communities to
plant Jatropha curcas for biodiesel, and recently allocated an area for production of sugarcane for
bioethanol. This is changed and various aspects contained in the framework such as development
of policies that safeguard the interests of sustainable development and generation of knowledge
are currently happening in the country. The government acknowledged the complexity and
controversies surrounding this area of investment that it has decided to exercise caution. The
actions taken include:
     o the assessment of potential for producing biofuels in Mozambique which was supported
         by the World Bank and the Italian governments;
     o the establishment of the inter-ministerial task force and working groups to coordinate
         and support decision making and establishing a conducive policy environment through
         development of a biofuels policy, strategy and plan;
     o the adjournment of the allocation of land until the nation zoning (albeit at small scale 1:
         1 000 000) is completed and approved by the Council of Ministers.
     o The testing of blending of bio and fossil fuels by PETROMOC where the State is a
         major shareholder is also an important step to establishing the technological and
         logistical capacity to serve the national and the regional market supplied oil through this
         company.

These are certainly positive steps and important preserves for ensuring informed decision making.
However, there is room for improvement: harmonization of sectoral policies, institutional
coordination, organized debate on critical issues (e.g. land for food or fuel), and commitment to
delivering on existing policies. For example, this study highlighted the set of existing policies that
constitute a platform for the formulation and implementation of the policy and strategy on
bioenergy production in the country. The discussion of the policy content and some practical
experiences in the field has shown some serious disconnections, particularly in relation to the
protection of legal community rights. The successive dispossession and transfer of formal rights
from communities to investors denounce a gross or deliberate misunderstanding of the spirit that
guided the establishment of such legal provisions in the face place. This has a short term impact
with long term consequences on the livelihoods of the people that are apparently a target of
government macroeconomic policies. The consultation of the communities and formation of
partnerships would bring communities and the private sector as shareholders with the community
contributing land and labour while the private sector would bring the technological know how
and the investment capacity. Addressing hunger and poverty should not be seen as mutually
exclusive with promotion of growth. Concomitant interventions are necessary and mutually
beneficial partnerships can deliver on both more efficiently than investing in conflict management.

The country is still in a process of establishing the technological capacity for production of
biofuels, as it was shown there is only one large scale investment approved and establishing the
production of raw material and a processing plant (PROCANA), the initiatives by sugar
producing companies are yet to produce results. The prospective investors from Europe, Brazil
and Scandinavian countries do bring technology that has been tested and it is producing results.
However, the adaptation to the context of Mozambique (socio-economic, infrastructure,


                                                                                                  28
institutional arrangement, etc.) will be determinant to yielding meaningful economic benefits for
the country and positive environmental impacts. PETROMOC is leading the technology
development having installed a plant for production of biodiesel and has been testing the market
for that. The Eduardo Mondlane University and other international research institutions are also
engaged in research of technologies that can be used at small scale level and hopefully contribute
to improving the crop production techniques (e.g. running equipment with biodiesel) and increase
food production. Lessons from introduction of jatropha demonstrate that there is need for
integrating production, processing and market for smallholder production to minimize the
opportunity cost of labour, land and lessen the possibility of driving the farmers to further
impoverishment.

Currently the main drivers of biofuels production in Mozambique are the external markets,
particularly European. The domestic consumption is small to justify the demand for land and the
level of investment in processing. However, this can also stimulate the growth of the market and
the agricultural sector, particularly production of food crops for local consumption and eventually
export require low cost fuels.

In terms of the current land demand, it reaches almost 3 million ha, but only about 150 000 ha
constitute projects either approved or under consideration. The general perception is that
Mozambique has plenty of unused land which would be available for biofuel crops. However, the
absence of land inventory and zoning, lack of harmonization of various demands for land poses a
big challenge in establishing what is actually empty and degraded land, how to share and ensure
equitable access to water resources for human consumption and economic activities such as
biofuels production.

The levels of production are not clear as yet. However, there is indication that only the current
partnerships that PETROMOC is establishing require a storage capacity of about 2 million m3.
Therefore, it can be roughly estimated that if the projects in pipeline are approved the capacity
may double with domestic consumption of 2.5 to maybe 5%.

The potential for involvement of outgrower schemes is enormous but the strategy is yet to be
developed. This study used the associations of sugar cane producers to analyse the current and
potential gains from such engagement. The financial and economic benefits can be realized, but
there is need for a more focused analysis considering the land and labour availability that would
be required for investing in a viable enterprise. It is clear that the people who are currently
engaged in the production of sugar cane have transposed the poverty line threshold and they are
investing in improving their livelihoods and even providing services to wider community such as
water. The support systems have to be well integrated in the bioenergy strategy and action plan.
From the economic point of view the market arrangement of monopsony (many producers and
one large buyer) is problematic in the sense of reducing the power of the seller (community
associations) to negotiate favourable terms of sale contract.

The environmental gains claimed such as reduction of green house gases associated with biofuels
need to be looked more closely. The environmental impact assessment and monitoring are key to
establishing the levels of soil degradation, water contamination and other forms of pollution
versus the environmental benefits of biofuels. The existing environmental policy framework in
Mozambique is sufficient for such analysis to be undertaken. However, the capacity to monitor
implementation of mitigation measures need strengthening.

The current institutional framework seems to focus on high level policy and technical institutions
mainly drawn from government. Even at that level, the absence of key sectors such as the water


                                                                                                29
sector from the technical committee seems to be an oversight that needs to be addressed. The civil
society is a partner that can support the policy development process which does not seem to
engage with local level government authorities and less so with the communities. There has to be
a link between the macro-aspirations and the concerns of the local people who in the last instance
will be affected by those policies. During this study there was no obvious concern and
engagement of all levels in this process.

The main recommendations of the study include:
(i) a review of the current institutional (Box 3) set up at technical and political level to address the
biofuels;
(ii) support to ensure that the development of biofuels production are guided by the existing
legislation on land, forestry, wildlife, water and environment to avoid conflicts;
(iii) the Ministry of Agriculture should lead the discussion on the land policy particularly as
regards the protection of community rights, the size of land that communities can secure rights
over and the type of negotiating rights and obligation associated with that. This go beyond the
investments on biofuels: the devolution of resources rights to local communities need to be
critically looked at, dissemination to local authorities needs to be secured given the current
dynamics of institutional representation. The civil society has an important role to play.
(iv) CONDES as a cross sectoral policy body should steer the development of Land Use Planning
Policy, Land Use Planning and Integrated Zoning taking into account the law on territory
planning. The add hoc zonings are useful at micro-level, however they need to be guided by a
more comprehensive analysis of land capacity and best use;
(v) the ministries of agriculture and environment should lead the development of a Strategic
Environmental Assessment of the National Biofuels Strategy to offer the Ministry of Energy, the
Ministry of Industry and Commerce, the Centres for Investment Promotion a guide or checklist of
issues that need to be addressed by investments in this sector;
(vi) conduct a detailed analysis of financial and economic viability of smallscale production of
biofuels and support needed (technical, financial and institutional) in targeted areas were biofuel
investments are taking place.




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   6. BIBLIOGRAPHY

AIM (2007). Mozambique: British Company to invest US$510 million in sugar and ethanol plant.
AllAfrica.com web page.

Bioenergy Pact between Europe and Africa. Website.

Carlos, Serra (2007). Colectânea de Legislação do Ambiente. Centro de Formação Juridico e
Judiciária. Ministério da Justiça. Maputo.

CEPALAGA (2007) Estudo de Impacto Ambiental da Fábrica de Açúcar da Açucareira de
Moçambique, SARL. Beira.

CEPLAGA (2006). Estudo do impacto Ambiental para o projecto de Propriedade de Cana de
Açúcar de Muda-Chidassicua - Açucareira de Moçambique, SARL. Beira.

CONTOUR (2006). Plano de desenvolvimento de Negócio para Conservação da Natureza na
Comunidade de Cubo. AWF. Volume 2.

CONTOUR (2006). Plano de Gestão Estratégica. Comunidade de Cubo. AWF. Volume 1.

DINATEF (2008). Relatório de Balanço Anual 2007. Draft. MINAG. Maputo.

DNENR (2008). Situacao dos biocombustiveis no pais. ppt

DNTF (2006). Estratégia Nacional de Reflorestamento. Por um desenvolvimento de plantações
florestais suntentáveis. Presentation at the 1st National Meeting on Lands and Forests. Maputo

FAO (2007). Bioenergy and Food Security Project. FAO web site.

FAO (2007). State of World’s Forests. FAO. Rome

GoM (2006). Poverty reduction strategy 2006-2009. Ministry of Planning and Development.
Maputo.

Himede, J. (2008). Bioenergy and Sustainable Development: opportunities and challenges. Ppt
presentation in Washington.

Impacto (2006). Projecto de Expansão da área de plantação de cana de açúcar em Xinavane.
Estudo de pré-viabilidade ambiental e definição de âmbito. Açucareira de Xinavane, SARL..
Maputo.

Impacto (2007). Plantação de cana de açúcar e produção e armazenamento de açúcar em Maragra,
Manhiça. Estudo de pré-viabilidade ambiental e definição de âmbito. Maragra Açúcar SARL .
Maputo.




                                                                                              31
IRIN (2007). AFRICA: Food to eat or to run your car ? UN Office for the Coordination of
Humanitarian Affairs.

Jootse, Martin (2003). Jatropha and Biodiesel in Mozambique. SASOL. Maputo

MADER (2004). PROGRARI II: Strategy Document. Ministry of Agriculture and Rural
Development. Maputo.

Marzoli, Antonio (2007). Avaliação Integrada das Florestas de Moçambique. Inventário Florestal
Nacional. DNTF/MINAGRI. Maputo.

Preseco Oy (2008). The Mbono Concept: East Africa. A regional study for Zambia and
Mozambique. Preseco/Hamk/Finnpartnership.

Pretromoc ( ). Company Profile. Petroleos de Mocambique. Maputo.

Petromoc (2008). Project Development Strategy. Petroleos de Mocambique. Maputo.

Togaat Hulett (2007). Annual Report 2007. South Africa.

UN (2008). Sustainabl Bioenergy: a framework for decision makers.




                                                                                           32
Appendix 1 People and institutions that contributed to information gathering for this study

Name                           Institution                              Location          and          other
                                                                        observations
Eng. Saide                     National Directorate of New and          Maputro
                               Renewable Energies of the Ministry
                               of Energy
Dr. Anna Locke                 CEPAGRI – Centre for Promotion of        Maputo
                               Agriculture
Eng. Salvador Jossias          National Directorate of lands and        Maputo
Eng. Oreste Nakala             Forestry
Eng. Alima Issufo
Dr. Afonso Madope              Fransfrontier Conservation Areas         Maputo
                               Unit, Ministry of Tourism
Dr. Felício Fernando           National         Directorate      of     Maputo
                               Environmental Impact Assessment
Prof. Dr. Almeida Sitoe        Faculty of Agriculture and Forestry      Maputo, involved in research of
                               Engineering of the UEM                   biomass for biofuels
Prof. Dr. Carlos Lucas         Faculty of Engineering of the UEM        Maputo, research of processing
                                                                        technologies for alternative energies
                                                                        including biofuels
Monica Brancs                  SEKAB/Eco-energia – Swedish              Maputo but investment area is Cabo
Dr. Kemal Vaz                  Company                                  Delgado
Eng. Roberto Zolho             AWF                                      Maputo
Eng. António Limbau            Provincial Director of Agtriculture in   Beira
                               Sofala province
Dr. Augusta                    Head of the Provincial Services of       Beira
                               Forestry and Wildlife
Eng. Elidio                    Provincial Directorate of Agriculture    Gaza province hosts the first large
                               in Gaza province                         scale biotehanol producing company
                                                                        (PROCANA)
Eulália Atibe                  Head of the administrative Post of       Maputo
                               Xinavane in Manhiça district
David                          Technical        Assistant/extension     Provides support the the sugar cane
                               services                                 Maguiguane Association
Salomao Chauque                Maguiguana Association of Sugar          Maputo; association already hiring
Geraldo Macuacua               Producers in Xinanave                    and paying the technical assistant
                                                                        (David)
Eugénio Zaqueu                 Members of the Macuvulane                Maputo
Jafete Zimba                   Association of Sugar Producers
Francisco Muchave
Pedro Matavele
Virginia Cossa
Francisco Muchave
João chongo
David Cossa
Mandy Macuacua
Joaquim Macome
Eng. Eugénio Silva             PETROMOC                                 Part of the working group on
                                                                        investments          (Interministerial
                                                                        committee on biofuels); involved in
                                                                        the experiment of production,
                                                                        storage, blending and distribution of
                                                                        biodiesel from coconut




                                                                                                          33
Setefani Isautier              Director General of Açucareira de   Telephone interview
                               Marromeu
Eng. Guambe                    Açucareira     de    Moçambique,    Telephone interview
                               Mafambisse
Helena Motta                   WWF- Mozambique                     Maputo Office
Rito Mabunda
Appendix 2 Distribution of Petromoc storage facilities in the country




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