A planned coal-fired power plant in Moatize, province of Tete, is seeking more than half a billion dollars in financing from multilateral lenders and export credit agencies, the head of the company leading the project told the media.
Saudi Arabia-based ACWA Power is leading the development of the 300 MW project at Vale’s coal mine in Moatize. Vale will use 80% of the power produced in its mining operations, while the remaining 20%, or 60 MW, will be sold to Mozambique electricity utility EDM. The project is 56.5% owned by ACWA, with smaller stakes held by Vale and Japanese firm Mitsui. According to state news agency AIM, EDM has a 5% stake in the project, and Whatana Investment Group, an investment firm led by Graça Machel, has 8%.
Paddy Padmanathan, CEO of ACWA Power, said on Monday that financing the plant is “turning out to be quite a challenge”, having gone through “a few different configurations on the financing structure”.
Total investment in the project will be “just short of $1 billion”, Padmanathan said. Some of that will come from the partners’ equity investments, and there is a portion of uncovered debt already committed – but Padmanathan said he expects the majority of the finance to come from debt provided or guaranteed by multilateral lenders and development finance institutions.
ACWA has engaged Korean engineering firm GS to build the plant, meaning the Korean export promotion bank KEXIM is likely to be one of the project’s financiers. Other candidates include the African Development Bank, which recently committed $300 million to Vale’s Mozambique coal export project, the Nacala Logistics Corridor.
The World Bank Group, however, is less likely to fund the project thanks to new guidelines which mean it can only finance coal generation “where there are no feasible alternatives available to meet basic energy needs”. The guideline’s came in after the bank’s controversial involvement in financing South Africa’s Medupi coal-fired power project.
The north-western province of Tete is home to the Cahora Bassa hydroelectric dam, with a generating capacity of 2,075 MW. However, the majority of this power is sold to South Africa and other countries in the Southern Africa Power Pool – meaning Mozambique still struggles to cover national demand of around 800-900 MW, according to the head of EDM, Mateus Magala, speaking to state television earlier this month.
The Moatize plant is just one of a number of coal-fired power projects planned by coal miners in Tete. Jindal is also planning 180 MW of generation at its mine, while ICVL, a consortium of Indian state-owned coal miners and steel producers, is currently re-tendering for a firm to build a 200 MW plant it its mine.
London-listed Ncondezi Energy is in talks with Chinese firm Shanghai Electric Power (SEP) to build a 300 MW plant, most of which will be supplied to the national grid. On 5 February, it announced it was extending the period for exclusive negotiations with SEP until the end of May 2016, to reach agreement on how to proceed.
In the south of the country, gas is becoming the predominant fuel with plants at Ressano Garcia, on the South African border, and the Kuvaninga Energia project at Chokwe, running on gas produced by South African firm Sasol at its project in Inhambane province.
2 total views, 2 views today