Export & Import (Exim) Bank of the People’s Republic of China is expected to finance the construction of a coal-fired power station at Kamwamba, in the southern Malawi district of Neno.
Energy Minister Ibrahim Matola reports that the Malawi government has already submitted designs for the power plant to the Chinese bank, which is expected to start releasing the funds this year. “With the cordial relationship we have with Exim Bank, we are sure they will fund this project without any problems,” says Matola.
Malawi has already signed a memorandum of understanding with China Gezhouba Group to construct the power plant over 24 months at a cost of about $667-million.
The planned power station will use 400 000 t of coal a year railed from the Moatize coalfield, in neighbouring Mozambique. It will add 300 MW to Malawi’s total electricity production of 351 MW. Demand currently stands at 350 MW but is expected to increase “tremendously” owing to growth in the mining and manufacturing sectors.
“There are several mining sites which require electricity from the main grid. For example, we have the Kayelekera uranium mine, which is still using diesel for its operations. We also have limestone, bauxite and heavy mineral sands operations that have been failing to get on stream because of a lack of adequate electricity,” says Matola.
He adds that Malawi, which has signed an agreement with Mozambique to construct an interconnector between the countries’ power grids, will also be in a position to sell power to Mozambique and Zambia once the coal-fired power plant and other ongoing electricity projects come on stream.
“Malawi is currently not connected to the Southern Africa Power Pool (SAPP). The construction of the interconnector will enable us connect to the SAPP and sell excess power to Zambia and Mozambique.
“In Zambia, there is growing demand for power due to the growth of the copper mining industry, and we want to take advantage of these developments,” he says.
The Malawi government has also signed a multimillion-dollar deal with a Chinese company TBEA to upgrade the country’s power transmission network.
Malawi is implementing several reforms in the electricity sector, including allowing independent power producers (IPPs) to beef up power supply. The IPPs include Australian firm Intra Energy Corporation, which is constructing a 120 MW coal-fired power plant at Chipoka, in the lakeshore district of Salima. Intra Energy’s project will use coal mined in Malawi’s northern coalfields.
Malawi hosts an estimated 22-billion tons of coal resources in the north and south of the country.
The country has introduced special incentives to encourage firms to invest in its electricity generation sector. For example, it now allows the duty-free importation of electricity generation and distribution equipment. It is also reviewing its electricity tariff structure with a view to removing subsidies provided by the Electricity Supply Corporation of Malawi to ensure a competitive playing field for investors.