Governmental Framework

Energy policy is under the mandate of the Ministry of Energy and Hydrocarbons (MEH) and its respective Directorate implements policies related to renewable energy development and rural electrification. The Agency for Rural Electrification Development, ADER, was established for rural electrification. The electricity sub-sector is regulated by an independent entity, ORE, responsible also for granting permits to Independent Power Producers. JIRAMA is Madagascar’s vertically integrated state-owned water and electricity company.

Ministry of Energy and Hydrocarbons (Ministère de l’Energie et des Hydrocarbures – MEH)

MEH implements the national energy policy, provides strategic coordination of the energy sector, and oversees JIRAMA’s electricity sector activities. It is also the licensing authority responsible for granting permits and concessions for the exploitation, generation, transmission and distribution of electricity facilities, including foreign assistance requests. MEH’s Directorate of Electricity and Renewable Energy (Direction de l’Electricite et des Energies Renouvelables – DEER) implements the policy related to electricity and renewable energy provision.

http://www.energie.gov.mg

Rural Electrification Agency (Agence de Développement de l’Electrification Rurale – ADER)

ADER, established in 2005 following the Decree 2002 – 1550, is a public administrative institution responsible for rural electrification through grid-extension and off-grid mini-grid systems. ADER implements rural electrification policies, provides technical advice to private operators, and oversees the realization and financing of rural electrification and renewable energy projects. To promote access to basic electricity services, ADER also manages the National Electricity Fund (NEF).

http://www.ader.mg

Board of Electricity Regulation (Office de Regulation de l’Electricité, ORE)

ORE, established in 2002, is the energy regulator with specialized technical, consultative and executive expertise. It is composed of two bodies: the Council of Electricity (CE), a decision-making board, and the Executive Secretariat (SE), with administrative and technical boards. ORE regulates the electricity sub-sector and is responsible for electricity tariffs as well as the monitoring the application of standards, quality and continuity of service, as well as fundamental principles of competition.

http://www.ore.mg/

Malagasy Water and Electricity Company (Jiro sy Rano Malagasy – JIRAMA)

JIRAMA is the vertically integrated state-owned water and electricity company. It is responsible for the majority of the generation, transmission, and distribution of electricity as well as for water services in urban areas. The company is under joint supervision of the Ministries in charge of Water, the Ministry of Finance and Budget, and the Ministry in charge of Energy and Hydrocarbons.

http://www.jirama.mg/

Hydrocarbons Office (Office Malagasy des Hydrocarbures – OMH)

OMH is a public industrial and commercial institution responsible for regulating the downstream petroleum industry.

http://www.omh.mg/

Ministry of Water (Ministère en charge de l’Eau)

The Ministry of Water is responsible for water and sanitation policy as well as the use of water resources in hydroelectric project development.

http://www.mineau.gov.mg/

Following the passing of the Electricity Law, private investments are legally allowed in the energy sector, reflecting the objectives of the New Energy Policy for 2015 – 2030 to increase electricity access. No feed-in tariffs supporting the renewable energy development are currently in place and JIRAMA is considered reluctant or unable to buy independently produced power at favorable tariffs. IPP tariffs are negotiated on a contract-by-contract basis and are supervised by ORE.

Electricity Law (Loi 98 – 032 sur l’Electricité, 1998)

The Electricity Law established a comprehensive institutional framework for reforming the electricity sector and opened up the electricity market to operators other than JIRAMA. Through this Act, operators are recognized as owners of installations, as determined in the form of a Concession permit or Authorization permit, obtained either through a call for tender or by way of unsolicited application. The Electricity Law established the Agency for the Development of Rural Electrification (ADER) under the Decree 2002 – 1550 and the Electricity Regulation Board (ORE) as part of the terms of the Law 98 – 032.

The Law 2002 – 001 creating the National Electricity Fund (NEF)

The NEF is intended to finance rural electrification initiatives using grants provided to operators holding the requisite authorization or concession. A consumer tax of 1.25% on electricity bills for consumption above 20 kWh/month provides income for the NEF, creating capital to mitigate electricity tariffs for rural consumers.

The Law 2015 – 039 reforming Public-Private Partnerships

The State confirmed its determination to develop Private Public Partnerships (PPPs) particularly in the construction and rehabilitation of key infrastructure.

2015 – 2030 New Energy Policy (Nouvelle Politique de l’Energie – NEP)

The Government has created a New Energy Policy (NEP) for 2015 – 2030 within the framework of the National Development Plan 2015 – 2019. The New Energy Policy outlines several objectives, including: the provision of access to modern energy for 70% of households (equivalent of 7,900 GWh) via 70% grid extension, 20% mini off-grid, 5% SHS (Solar Home System) and 5% solar lamps; 85% of the country’s energy mix to come from renewables by 2030 (75% hydro, 5% wind, 5% solar), and; the implementation of energy efficiency measures by 60% for businesses and industries.

Improvement of Governance and Operations in the Electricity Sector Project (PAGOSE)

With the support of the World Bank, the Government of Madagascar is initiating reforms and carrying out priority investments for the recovery of the electricity sector through PAGOSE. The project includes priority actions in three interlinked areas: governance of JIRAMA, financial planning and sustainability of the Electricity sector, and reliability and continuity of service.

Economic Development Board of Madagascar

The Economic Development Board of Madagascar (EDBM) is the one-stop shop for the administering and establishment of all investment projects. The EDBM certifies eligibility for companies to benefit from the special regime for Free Zone Companies, and grants authorization for foreign investors to acquire land (though land lease titles must still be granted by the Ministry of Land Management). For other necessary authorizations, licenses and permits, the EDBM acts as the interface between the investor and various agencies and institutions, though these agencies and institutions retain decision-making authority.

Laws and Regulations Governing Foreign Direct Investment

Madagascar suffers from a difficult and unattractive economic environment for foreign investors. Lingering political instability, high currency risk and national poverty continue to hinder foreign investment. The review of the Electricity Law is expected to improve the investment climate for foreign private investment through incentives, allowances and exemptions.

The major laws relevant to foreign direct investment include: the Law on Investments (Law 2007 – 036), the Law on Free Zone Companies (Law 2007 – 037), the Law on Large Scale Mining Investments (Law 2001 – 031, modified by Law 2005 – 022), the Petroleum Code (Law 96 – 108), the Law on Commercial Enterprises (Law 2003 – 036), the Public Private Partnerships (Law 2015 – 039), and the Labor Law (2003-044).

Renewable Energy Investment Incentives

The Tax Code of 2015 includes a number of fiscal incentives for investments in the production and distribution of renewable energy: investments in renewable energy can benefit from a reduction in corporate income tax equivalent to 50% of the investment undertaken; equipment for the production of renewable energy (wind power generators, hydropower generators, solar water heaters, Solar PV panels) is exempted from VAT; investment in equipment (with the exception of buildings) can be depreciated at an accelerated rate of 30% of the net value.