Mozambique has announced plans to sell a majority stake in the planned $2.4 billion Mphanda Nkuwa hydropower, which is set to be one of the biggest in southern Africa. The goal is to reach a financial close by 2024 on the 1,500MW facility and an associated transmission line that could increase the total project cost to as much as $4.4 billion.
The government will issue a request for proposals this year and will take up to four months to select the winner and another six weeks to negotiate the joint development agreement.
The shareholding structure for the new project will include state-controlled Hidroelectrica de Cahora Bassa, which owns the existing hydropower plant upstream, and electricity utility Electricidade de Moçambique EP. While selling a majority equity stake in the new dam will raise part of the funding, the government will also seek financing from multilateral and bilateral lenders and commercial banks.
According to Carlos Yum, the director in charge of the Mphanda Nkuwa project, the new equity investor should already own and operate similar projects of comparable size.
Mphanda Nkuwa will be about 60 kilometers downstream of the Zambezi River from the Cahora Bassa hydropower dam that can generate 2,075MW of power. Mozambique sells most of the electricity from that dam to neighbouring South Africa, where there have been shortages for more than a decade.
In addition to exporting power, the Mphanda Nkuwa project will sell electricity to Mozambicans. About one-third of Mozambicans have access to power, and plans are underway to increase this to 100% by the end of the decade. Commissioning for the project is set for 2030.
The dam will be Mozambique’s latest multi-billion dollar energy project. TotalEnergies is developing a $20 billion plan to export liquefied natural gas from sub-sea reserves in the country’s far north.