Mozambique: Moatize coal-fired station gets the go-ahead

Feb 19, 2014 12:00 AM

The Mozambican government has approved the project to build the Moatize coal-fired power station, in the western province of Tete, budgeted at around a billion US dollars, and with the capacity to generate 600 megawatts of electricity.

The project will be run by Acwa Power Moatize Termoelectrica SA, a consortium whose main shareholders are Acwa Power of Saudi Arabia, Vale of Brazil and Mitsui of Japan. There are two Mozambican minority shareholders, the Whatana Investment Group (whose chairperson is the former first lady, Graca Machel), with eight per cent and the publicly-owned electricity company, EDM, with five per cent

The power station will be located at the mouth of the open cast coal mine operated by Vale in Moatize. The higher grade coal (particularly the coking coal) mined by Vale will be exported, while the lower grade coal will be burnt in the power station.

Speaking at a press conference, the Minister of Energy, Salvador Namburete, said the concession granted to Acwa is for 25 years, starting from the date when commercial operations begin. Construction of the power station is expected to take three years.

The project will be built in two phases. The first phase will generate 300 megawatts. Most of this (200 to 250 megawatts) will be used by Vale itself to run its mining operations. EDM will take the rest of this, adding it to the national electricity grid.

Namburete said this would increase the availability of electricity on the country, which he put at about 2,000 megawatts, mostly from the Cahora Bassa dam on the Zambezi.

The Minister pointed out that if the coal that cannot be exported is not used in a power station then it will simply pile up alongside the mine “with all the environmental problems that would arise from that”.

He added that the project will create 1,370 jobs - 1,250 in the construction phase, and 120 in operating the power station.

The Minister said that the participation of EDM and Whatana guarantees compliance with the provisions of the Mozambican law on public-private partnerships. “The law also states that, by the fifth year from the start of operations five per cent should be reserved for sale through the stock exchange to individual citizens”, he added. “So this will happen during implementation of the project”.

Namburete also announced that the Council of Ministers (Cabinet) has authorised the Ministry of Energy to enter into direct negotiations with interested companies (rather than issue a public tender) to award contracts for building the Boroma and Lupata hydroelectric projects on the Zambezi.

The Boroma dam, located upstream from Tete city, is budgeted at 536 million dollars and will generate 210 megawatts. Lupata is downstream from Tete, and is much larger - it will generate 610 megawatts and cost 1.1 billion dollars.

Namburete said that the government was resorting to direct award of contracts, rather than to a tender, because “many of the studies concerning these two projects were drawn up before the current legislation on public-private partnerships came into effect”.

Namburete himself will head a team formed by staff from the Ministries of Energy, Finance, Planning and Development, Justice, Public Works, Agriculture, Labour and the Environment, which should propose a concession contract for these projects. That proposal should be submitted to the Council of Ministers within six months.

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