9 September, 2009

The construction of a new dam on the Zambezi river at Mphanda Nkuwa, and of a north-south power line are the priority projects for the energy sector over the next five years, according to Energy Minister Salvador Namburete.

Speaking at a meeting of the Consultative Council of his Ministry in the southern resort of Chidenguele, Namburete stressed that the two projects are interlinked.

Mozambique’s enormous hydropower potential means that it should be selling large amounts of power to other members of the Southern African Development Community (SADC). However, almost all the 2,075 megawatts generated at the existing dam on the Zambezi at Cahora Bassa are already contracted to firm buyers.

New power stations are needed and Mphanda Nkua is likely to be the first to come on stream. On current projections, about 90 per cent of the 1,500 megawatts from the new dam will be sold to South Africa, while the other 10 per cent will be consumed within Mozambique.

Since the existing power line from Cahora Bassa to the Apollo sub-station in South Africa can carry no more energy, a new line must be built. This north-south line, referred to as the “backbone” of the Mozambican electricity grid, will enable power to be transmitted directly from the Zambezi Valley to Maputo and the rest of southern Mozambique – under the current arrangements, Cahora Bassa power reaches Maputo via South Africa.

An economic study has cut the projected cost of the line by more than half. The initial forecast was that a Tete-Maputo line would cost $5 billion, but the study on technical options scaled this back to $2.4 billion.

The line will eventually have the capacity to carry 6,000 megawatts – which would allow it to carry power generated not only at Mepanda Nkuwa, but also at projected coal-fired power stations in the nearby district of Moatize, and perhaps from a second power station at Cahora Bassa, on the north bank of the river.

The first phase, involving an investment of $1.8 billion, would produce a line capable of carrying 3,100 megawatts. A second phase, with further investment of $512 million, would boost capacity by a further 2,900 megawatts.

The line already has guaranteed funding from Norway and the World Bank, and promises from the French Development Agency (AFD).

The first phase of Mphanda Nkuwa would generate 1,500 megawatts, but a second phase could push this up to 2,400 megawatts.

An environmental impact study is under way and, if favourable, this will lead to the issuing of an environmental licence, which is indispensable for work of this scale. At the same time negotiations are under way for an agreement on the sale of the power.

The cost of the dam is estimated at $2 billion, to be mobilised by the Mphanda Nkuwa Hydro-electric Company, a consortium formed by Camargo Correia of Brazil, Energia Capital (a member of the Mozambican INSITEC Group), and Mozambique’s publicly owned electricity company, EDM.

Construction should begin in January 2011, with the start of the commercial operation of Mphanda Nkuwa forecast for 2015.

Namburete also revealed that he has received a letter from the company Ayr-Petro-Nacala, assuring him it had not abandoned its plan to build an oil refinery at Nacala on the northern Mozambican coast.

It had been feared that the international financial crisis had killed off the project. But Ayr-Petro-Nacala (in which the majority shareholder is the US company Ayr Logistics) told the Minister it was looking for “new partnerships” to implement the project.

“Maybe with the signs of revival in the world economy this project will gain impetus again”, said Namburete. “But it’s not been dropped, and we continue to receive correspondence from the investors”.

Plans for a second oil refinery, this time in the far south of the country, are also still alive. The company Oilmoz has, however, switched the location for its refinery from Matutuine, south of Maputo city, to Marracuene district, some 30 kilometres north of the capital.

The switch is because of other projects planned for Matutuine, including a new port at Ponta Dobela, and a major eco-tourism venture.

The Oilmoz refinery would entail an investment of $8.4 billion. Viability studies will be undertaken by the international consultancy company PriceWaterhouseCoopers, and by the Mozambican publicly owned fuel company, Petromoc.