Madagascar Energy Situation

Madagascar

Capital:

Antananarivo

Region:

Sub-Saharan Africa

Coordinates:

20.0000° S, 47.0000° E

Total Area (km²): It includes a country's total area, including areas under inland bodies of water and some coastal waterways.

587,295

Population: It is based on the de facto definition of population, which counts all residents regardless of legal status or citizenship--except for refugees not permanently settled in the country of asylum, who are generally considered part of the population of their country of origin.

31,195,932 (2023)

Rural Population (% of total population): It refers to people living in rural areas as defined by national statistical offices. It is calculated as the difference between total population and urban population.

59 (2023)

GDP (current US$): It is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources.

15,790,113,247 (2023)

GDP Per Capita (current US$): It is gross domestic product divided by midyear population

506.16 (2023)

Access to Electricity (% of population): It is the percentage of population with access to electricity.

39.40 (2023)

Energy Imports Net (% of energy use): It is estimated as energy use less production, both measured in oil equivalents. A negative value indicates that the country is a net exporter. Energy use refers to use of primary energy before transformation to other end-use fuels, which is equal to indigenous production plus imports and stock changes, minus exports and fuels supplied to ships and aircraft engaged in international transport.

13.70 (2017)

Fossil Fuel Energy Consumption (% of total): It comprises coal, oil, petroleum, and natural gas products.

13.97 (2022)

Source: World Bank

Introduction

Madagascar is an island country that includes the island of Madagascar and numerous smaller peripheral islands in the Indian Ocean. It is located 400 kilometres (250 mi) off the eastern coast of Southern Africa, east of Mozambique. Madagascar it is the world's fourth largest island and the second-largest island country (after Indonesia). Its capital and largest city is Antananarivo.^[1][2]

Madagascar has a population of almost 32 million. ^[3] As of 2023, 81% of the population was considered to be poor.^[3]

Energy Situation

Access to electricity is low, with around 36% of the total population having access to electricity (23% grid access). In rural areas, only 7% of the population has access to electricity.^[4] The Government of Madagascar has set a target of 70% access to electricity by 2030. Grid electricity supply is unreliable due to a number of factors, including dependence on fuel oil, low hydropower production due to water shortages, financial and operational deficits, and outdated infrastructure for electricity generation, transmission and distribution, resulting in losses.^[5]

Only 1.5% of the population has access to clean cooking technologies and fuels.^[6]

Total Energy Supply and Total Energy Consumption

In 2022, 85% of Madagascar's total energy supply derived from bioenergy, followed by oil (12%), coal (2.5%) and hydro (1%).^[6]

Until today crude oil / petroleum products are all imported.^[6] Even though Madagascar has oil in place the oilfields are not being exploited yet. 14.5% of total energy supply were net imports of fossil fuels.^[6]

The per capita primary energy consumption in Madagascar was 508 kWh in 2021.^[7]

In 2022, total final consumption was 84% biofuels and waste, followed by 11% oil products. Electricity accounted for 3.4% and coal for 1.5%.^[6]

According to UNIDO, Madagascar’s energy balance shows that about 80% of its overall energy consumption is based on biomass (mainly firewood 68%, charcoal 10% and other biomass 2%).^[8]

With 64%, the residential sector is the largest sector of biofuels total final consumption. The commercial sector accounted for 30% of the biofuels and waste total consumption.^[6]

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Electricity Generation and Consumption

The installed capacity of electricity production in Madagascar accounts for under 800 MW, against a peak load of 680MW. The country faces system losses of 31% due to aging infrastructure.^[4]

With 46%, almost half of Madagascar's electricity generation is based on oil. Renewables account for 34.5 % of the electricity generation, most of it coming from hydro electric, which accounts for 31% of the total generation or 94% of the renewables generation.^[6] Hydropower is generated mostly by six hydro plants, but electricity generation has been declining over the last years, due to aging hydro plants, lacking maintenance and rehabilitation, and water shortages. ^[5][9]

Instead of a single synchronised national grid, Madagascar has three separate high-voltage grids: the Antananarivo Interconnected Network (which accounts for 70 per cent of electricity consumption), the Fianaratsoa Interconnected Grid and the Toamasina Interconnected Grid. These three grids are operated by the national electricity company (JIRAMA), but are largely concentrated in urban areas, with only about 400 km of high-voltage lines.^[9]

The rest of the electrified cities and villages rely on isolated small and mini grids (approx. 130 in 2020), mainly running on diesel.^[9]

Total electricity consumption per capita in Madagascar was 0.084 MW/h in 2022. The share of electricity in final consumption was 3%, with industry (39%) and residential (29%) sectors consuming the most.^[6]

Energy Supply and Demand in the Household Sector

For households all over the country, but especially in rural areas firewood and charcoal for heating and cooking, and kerosene and candles for lighting are the most important energy sources. Only about 7% of the rural population currently have access to electricity, which shows a large discrepancy compared to the urban areas where close to 60% of the households have access to electricity.^[4]

Lighting

For households lacking electricity access, kerosene lamps and candles are commonly used for lighting. In rural areas, the main energy source used for lighting is kerosene (80%), compared to 21% in urban areas. 3% uses candles for lighting in both urban and rural areas. In urban areas, grid electricity is the main source of energy for lighting the home.^[10]

The majority of these households allocate a substantial portion of their budgets to purchase kerosene.

Cooking

98 percent Malagasy households are heavily reliant on biomass for cooking, with firewood being the predominant fuel source (64%), as well as charcoal (35%). In general, people who have a higher income, are formally employed, live in urban areas or are higher educated, use more charcoal than firewood. For instance, 78 percent of adults in urban areas versus only 19 percent in rural areas use charcoal, and 75 percent of those with vocational training or a tertiary education versus only 12 percent of those with no education.^[11] Most of the biomass is burnt in traditional stoves. Clean cooking technologies and fuels are used by only 1.5% of the population^[6], with 1.5% of urban adults using electricity and 2% using gas for cooking.^[11]

Household Expenditure on Energy

There is little information on household expenditure for energy, but the following two publications report concrete numbers:

According to UNDP/UNCDF, people in Madagascar spend USD 626 million annually on all energy sources. Of this spending, 38% is spent on electricity. 58% is spent on other energy sources such as charcoal, oil or candles and the remaining 4% is spent on gas.^[11]

According to a study commissioned by the World Bank, the average monthly energy expenditure in Madagascar is approximately 15,249 MGA (USD 4.70), or USD 1.08 per week. In rural areas, monthly spending is lower at 11,000 MGA a month (USD 3.40). On average, about 35% of the population are “sometimes” and 31% “frequently” unable to afford to buy the energy source they currently use.^[10]

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Rural Electricity Supply

- to be updated -

While there were initially exclusively diesel-run electrification schemes, the sector has since 2007 shifted towards renewable energy projects with by now about 9 small hydropower-plants, 5 wind power plants and 1 biomass plant running village electrification schemes (In addition there are a few older plants and a few plants implemented by NGOs on the basis of renewable energies). Solar power is up to now only used for the electrification of some social infrastructure (including public lighting) and for single households mainly in the form of pico-solar-systems.

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Key Problems of the Energy Sector

- to be updated - / merge with section below

Power Africa lists the following as Madagascar's energy sector's top issues and bottlenecks^[12]: 

• Macroeconomic forces 
  
• Inability to pay/Lack of funding
  
• Weak unreliable utility
  

Institutional Set-up and Actors in the Energy Sector

- to be updated -

Public Institutions

• Ministère de l'Eau, de l'Energie et des Hydrocarbures (MEEH): responsible for the national energy policy and coordination of the activities in the energy sector. The Direction de l’Electricite et des Energies Renouvelables (DEER) implements the policy in the electricity and renewable energy domain.
  
• Agence pour le Développement de l’Electrification Rurale (ADER):established in 2004, responsible for ensuring the implementation of the rural electrification policies and the administration of related instruments, for promoting the provision of private-sector-services and providing technical advice to the private operators and for supervising the realization and financing of rural electrification projects.
• Office pour la Regulation de l’Electrification (ORE):established in 2004, responsible for the application of the norms, the quality of services, the principles of competition and the definition of the tariffs.

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Electricity Companies

• JIRAMA (Jiro sy Rano Malagasy – Malgache Power and Water):earlier monopolist, now a limited liability company fully state owned, responsible for provision of electricity (production, transport, and distribution) and water services in the urban areas of the whole country, activities concerning rural electrification have been ceded to the Rural Electrification Agency (ADER)
• Private operators: see 1.2.3
  

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Non Governmental Service Providers for Rural Areas in the Field of Energy

• Private operators: With the reform of the energy sector, implemented between 1998-2004; it was decided to promote the private sector participation in the sector of rural electrification. Until today, some 20 operators – mainly small and medium-sized companies - have realized approx. 80 projects in the rural areas. Most of the private operators are associated in the Association des Opérateurs Professionnels en Electrification de Madagascar (AOPEM).
  This private sector is relatively dynamic but faces some problems as regards experiences with renewable electrification schemes and getting access to financing for the projects (a part from ADER) because of their small sizes and deficits in book keeping and setting-up of business plans.

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Policy Framework

- to be updated -

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Energy Policy

Energy Sector Reform

On the basis of a World Bank initiative dating back to 1995, several donors have accompanied the government of Madagascar to unbundle and ultimately privatise the activities of the national electricity utility JIRAMA and at the same time reform the energy sector. With the adoption of the new law n° 98-032 on energy in 1999 and following decrees the sector had been formally liberalised. The objectives of the energy sector reform are the following:

• Development of independent power producers (IPP)
• Promotion of competition and private-public-partnerships
• Restructuring of the national power utility JIRAMA
• Providing 10% of the rural population with reliable and sustainable electricity supply until 2012
• Increasing the share of renewable energies (without traditional biomass) to at least 3% of the total energy consumption by 2012

Even though the reform process has partly failed as regards the restructuring of JIRAMA, there are now about 20 private operators active in rural electrification.

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National Electricity Fund (FNE Fond National de l’Electricité)

Together with the establishment of the Rural Electrification Agency in 2004, Madagascar has introduced a consumer tax of 1.25% on electricity bills for consumptions being higher than 20kWh per month. The funds are provided to the Rural Electrification Agency to co-sponsor rural electrification projects. The agency offers a maximum of 70 % of investment costs to private operators who contribute the remainder and receive the concession to exploit the plant for 10-20 years. Even though a national electricity fund is in place, its impact is restricted as the funds available are very limited and its actual structure does not allow for financial contributions by other stakeholders like international donors, finance institutions or private investors. Therefore a restructuration of the FNE is being analyzed.

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Feed-in Tariffs for 'Renewable Energies

The significance of the possibility to feed-in electricity to existing grids is rather limited due to the small size of the national grid. Nonetheless, where such projects have been developed, the national power utility JIRAMA has proven to be reluctant to offer favourable feed-in tariffs. Only 2 operators of small hydro power plants have managed to conclude individual feed-in contracts with JIRAMA on the basis of a 10 years’ tenure and a pretty low feed-in tariff of approx. € 0.04 / kWh. A feed-in-law is not in place and not on the current policy agenda.

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Key Problems Hampering Access to Modern Energy Services in Rural Areas

- to be updated - merge with section above

Obstacles for Grid-based Rural Electrification

• Lack of a national distribution grid: Madagascar does not possess a countrywide electricity grid. The national power utility JIRAMA is operating selected grids only around major towns with the longest stretching between the capital Antananarivo and Antsirabé with an overall length of approx. 180 km. As the rural areas are only sparsely populated a significant extension of the national grid is only foreseen for the very long term. Thus, rural electrification will at least for the coming decade typically rely on isolated grid solutions and only for few cases on the extension of the national grid.

Obstacles for Off-grid Energy Technologies and Services

• Insufficient financial capacities of the Rural Electrification Agency (ADER): ADER has the mandate but restricted means to promote rural electrification. As an example ADER gets only 1/20th of the budget allocated to the national power utility JIRAMA (budget 2008). The political crisis since 2009 has further restricted ADER’s budget (from about 10 Mio€ in 2009 to 4Mio € in 2010). The private sector is involved in the financing of rural electrification schemes (usually with a 30% share of the total costs for an electrification project with renewable energies), but as the involved operators are mainly small to medium sized companies they are not able to raise significant capital (little experience with bank loans, difficulties with bookkeeping and setting-up business plans, operation of loss-making diesel power plants)
• Very low purchasing power of rural customers: Madagascar is ranked 143 of all 177 countries and belongs accordingly to the poorest countries in the world. The farmers in the rural areas of Madagascar still remain mainly on subsidence farming and only little revenues are available for energy purposes. On the other hand the costs per kWh produced with renewable energies is still very high, because of expensive equipment, that has to be imported, and high capital costs.

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Further Information

• USAID Power Africa: Madagascar Factsheet

References

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