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 70s and early 80s, 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

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.

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 Manhia 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 Aucareira de Xinavane (Tongaat Halett) in Maputo, Aucareira de Moambique in Mafambisse in Sofala (outside the Delta) and Aucareira de Marromeu.
1

Unsuccessful attempts to meet PROCANA manager travel.

Interviews were also held with two community associations producing sugar cane under contract agreement with Aucareira 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 Aucareira 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 Aucareira 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.

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 Aucareira 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.

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 countrys 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 countrys 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

Cconversion of bags to volume of wood done by the author

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).

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

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

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 preindependence 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

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 investors 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

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 National Parks Limpopo Heartland Massingir Dam
0 15 30 60 90 120 Kilometers

SWAZILAND

SOUTH AFRICA

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

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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
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.
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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

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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

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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 polluters 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 interministerial 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.

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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 peoples 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

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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 (Aucareira de Maragra and Aucareira de Xinavane) were identified. Further, two EIA studies for Aucareira de Moambique 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 Aucareira de Moambique (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

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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 PrimeMinister. 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

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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
As far as the field study could establish 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
8 7

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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. 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. 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 Viosa 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.

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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 Agriculture

Ministry of Energy

Environment, CONDES 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 biofuel 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.

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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 o o Procana is the first to build a large integrated fuel-food-fertilizer plant in Africa Company owns an ethanol plant in Brazil. 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); 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. 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. 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".

o o

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.

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.

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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. Aucareira 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 Aucareira de Moambique (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 Aucareira 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 Huletts company (South African) which is the owner of the Aucareira de Xinavane (Maputo province) and Aucareira de Moambique (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

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320 thousand tons in 2010 corresponding to additional 2555 ha of land. Other sources of information indicate that the Aucareira 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

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

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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 Zambzia 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 Manhia (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.

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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 Aucareira 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 associations 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.

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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,

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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

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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). Colectnea de Legislao do Ambiente. Centro de Formao Juridico e Judiciria. Ministrio da Justia. Maputo. CEPALAGA (2007) Estudo de Impacto Ambiental da Fbrica de Acar da Aucareira de Moambique, SARL. Beira. CEPLAGA (2006). Estudo do impacto Ambiental para o projecto de Propriedade de Cana de Acar de Muda-Chidassicua - Aucareira de Moambique, SARL. Beira. CONTOUR (2006). Plano de desenvolvimento de Negcio para Conservao da Natureza na Comunidade de Cubo. AWF. Volume 2. CONTOUR (2006). Plano de Gesto Estratgica. Comunidade de Cubo. AWF. Volume 1. DINATEF (2008). Relatrio de Balano Anual 2007. Draft. MINAG. Maputo. DNENR (2008). Situacao dos biocombustiveis no pais. ppt DNTF (2006). Estratgia Nacional de Reflorestamento. Por um desenvolvimento de plantaes florestais suntentveis. 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 Worlds 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 Expanso da rea de plantao de cana de acar em Xinavane. Estudo de pr-viabilidade ambiental e definio de mbito. Aucareira de Xinavane, SARL.. Maputo. Impacto (2007). Plantao de cana de acar e produo e armazenamento de acar em Maragra, Manhia. Estudo de pr-viabilidade ambiental e definio de mbito. Maragra Acar SARL . Maputo.

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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). Avaliao Integrada das Florestas de Moambique. Inventrio 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.

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Appendix 1 People and institutions that contributed to information gathering for this study
Name
Eng. Saide

Institution
National Directorate of New and Renewable Energies of the Ministry of Energy CEPAGRI Centre for Promotion of Agriculture National Directorate of lands and Forestry Fransfrontier Conservation Areas Unit, Ministry of Tourism National Directorate of Environmental Impact Assessment Faculty of Agriculture and Forestry Engineering of the UEM Faculty of Engineering of the UEM

Location observations
Maputro

and

other

Dr. Anna Locke Eng. Salvador Jossias Eng. Oreste Nakala Eng. Alima Issufo Dr. Afonso Madope Dr. Felcio Fernando Prof. Dr. Almeida Sitoe Prof. Dr. Carlos Lucas

Maputo Maputo

Maputo Maputo Maputo, involved in research of biomass for biofuels Maputo, research of processing technologies for alternative energies including biofuels Maputo but investment area is Cabo Delgado Maputo Beira Beira Gaza province hosts the first large scale biotehanol producing company (PROCANA) Maputo Provides support the the sugar cane Maguiguane Association Maputo; association already hiring and paying the technical assistant (David) Maputo

Monica Brancs Dr. Kemal Vaz Eng. Roberto Zolho Eng. Antnio Limbau Dr. Augusta Eng. Elidio

SEKAB/Eco-energia Swedish Company AWF Provincial Director of Agtriculture in Sofala province Head of the Provincial Services of Forestry and Wildlife Provincial Directorate of Agriculture in Gaza province Head of the administrative Post of Xinavane in Manhia district Technical Assistant/extension services Maguiguana Association of Sugar Producers in Xinanave Members of the Macuvulane Association of Sugar Producers

Eullia Atibe David Salomao Chauque Geraldo Macuacua Eugnio Zaqueu Jafete Zimba Francisco Muchave Pedro Matavele Virginia Cossa Francisco Muchave Joo chongo David Cossa Mandy Macuacua Joaquim Macome Eng. Eugnio 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

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Setefani Isautier Eng. Guambe Helena Motta Rito Mabunda

Director General of Aucareira de Marromeu Aucareira de Moambique, Mafambisse WWF- Mozambique

Telephone interview Telephone interview Maputo Office

Appendix 2 Distribution of Petromoc storage facilities in the country

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