High Commission of the Republic of Mozambique

Finance secured for Temane Thermal Power Station

London, 9 Dec (AIM) – Funding has been secured for the 450 megawatt Temane Power Project (CTT) in the southern province of Inhambane, which will be the largest power station built since Mozambican independence in 1975.

According to a statement by the project leader Globeleq, debt financing of US$652.3 million is being provided by the International Finance Corporation (the member of the World Bank Group that focuses on the private sector in developing countries), the Dutch bank FMO, the United States International Development Finance Corporation, and the OPEC Fund for International Development. The political risk insurance to the private sector equity investors is being provided by the Multilateral Investment Guarantee Agency (MIGA).

The project is owned by a consortium composed of Globeleq (an institution formed by Norwegian and British funds), the South African hydrocarbon company Sasol, EleQtra, and Mozambique’s publicly-owned electricity company, EDM (which holds a 24 per cent stake in the project).

In turn, Globeleq is 70 per cent owned by the CDC Group (which is the British state development finance institution) and 30 per cent owned by the Norwegian Investment Fund for Developing Countries, Norfund.

The power station will use gas from Sasol’s Pande and Temane gas fields and supply electricity to EDM for the next 25 years for the provision of electricity to 1.5 million households in Mozambique.

The Temane power project is also the anchor project that allows for the development of a new 563-kilometre high-voltage transmission line which will be the first phase in the interconnection of the southern electricity grid with central and northern Mozambique.

The transmission line will be owned by EDM and financed with grants and soft loans from the World Bank, the African Development Bank, the Islamic Development Bank, the OPEC Fund for International Development, and the Norwegian Government.

In total, developing the gas fields, building the power plant, and constructing the transmission infrastructure will require an investment of over two billion US dollars.

The Globeleq statement notes that “the project is aligned with the Paris Agreement and will support Mozambique’s longer-term sustainable energy transition to net-zero by 2050”.

That commitment was stressed by the Minister of Mineral Resources and Energy, Max Tonela who points out that “as a country that is at risk from the worst effects of climate change, our government fully supports the Paris Agreement. We are working on our long-term decarbonisation plans in line with that Agreement and the Temane thermal power station is fully in line with our transition which also includes developing hydro, solar and wind projects”.

According to the International Finance Corporation’s regional director, Kevin Njiraini, “this pioneering project has the potential to deliver significant economic and social benefits by helping meet Mozambique’s growing demand for power, supporting the country’s economic recovery, and the region’s energy transition”.

The construction phase is expected to last 34 months during which around 830 jobs will be created. Once operational, the facility will provide 90 permanent jobs and Globeleq promises that “Mozambicans will be prioritised for jobs during both construction and operation”.

The Mozambican government is committed to achieving universal access to electricity by 2030 through its “Energy for All” programme and will work with Globeleq on other projects involving renewables such as the Cuamba solar and battery project, and other wind and solar developments.