JOHANNESBURG (miningweekly.com) – Aim-listed energy provider Ncondezi Energy has been granted an extension for meeting certain conditions relating to the conditional commercial deal signed between it and Electricidade de Moçambique (EdM) for its 300 MW power plant.

Ncondezi was establishing an integrated thermal coal mine and power plant project in northern Mozambique.

Following discussions with EdM and progress made on the power project, EdM formally agreed to extend the deadline for the conditions precedent. The extension was granted with the longstop date of September 30, and was subject to a number of conditions.

These included that Ncondezi had to reach a binding agreement with a strategic investor acceptable to EdM, to be the key responsible party for the development, construction and operation of the power project.

Ncondezi also had to obtain bankable environmental planning and management and operations and maintenance agreements for the power plant, mine and common infrastructure, while setting up an agreed timetable between EdM, the strategic investor and Ncondezi to finalise the key commercial agreements, namely the power purchase agreement, power concession agreement and the coal supply agreement.

The agreed commercial deal included the range for the starting electricity tariff to be paid by EdM, which would then be subject to adjustments during the 25-year operational life of the project.

The starting tariff range was based on a number of assumptions, including indexation, financing costs, coal costs, operator and maintenance costs and the technical parameters and capital costs contained in the binding power plant engineering, procurement and construction bids.

Based on a target project capital structure of 70% debt and 30% equity, Ncondezi on Tuesday said it believed that the conditional commercial deal supported the economics of the Ncondezi power plant and provided a regionally competitive dollar-based project equity and international rate on return.

In March, Ncondezi also received approval from the Ministry for Coordination of Environmental Action for its environmental and social impact assessment (ESIA) on the 92 km transmission line that would connect the project to the Mozambique national grid. ESIA approvals had already been received for the mine and the power plant.