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Aim-listed Ncondezi Energy has entered the final stages of negotiations on the power purchase agreement (PPA) and the power concession agreement (PCA) for its 300 MW power plant project near Tete, in northern Mozambique.
Ncondezi had completed all internal work streams and application requirements to enable the finalisation of the agreements and was in the closing stages of negotiating the key detailed parameters of the PPA and PCA with the Mozambican Department of Energy (DoE) and State energy group Electricidade de Moçambique (EDM).
A revised timeline had been agreed upon with the DoE and EDM and the formal submission of both agreements was expected by mid-August. In addition, the transmission engineering, procurement and construction (EPC) tender process had been initiated.
The coal developer added in a statement on Thursday that the Ncondezi project's economic parameters had now been predominantly finalised and the company was negotiating within an indicative tariff range and fiscal incentives package.
In addition, the power plant capital and operating costs had been confirmed through the receipt and further clarification of binding EPC and mine contractor bids and detailed discussions had been held with export credit agencies and commercial banks regarding the level of financing support.
Ncondezi had received a number of expressions of interest from potential investors with regard to participating in the equity of the project once it had executed the PPA and PCA.
Moreover, negotiations with potential codevelopers were at an advanced stage and the company expected to be in a position to update shareholders during the third quarter of the year.
Ncondezi was fully funded to complete the PPA, PCA and codeveloper processes.
Commenting on the announcement, CEO Paul Venter said the bespoke nature of the agreements, particularly the PPA and PCA, had taken longer than expected as Ncondezi was negotiating complex agreements spanning 25 years of power generation and offtake in Mozambique.
“However, we are in the final stages and all parties involved remain committed to completing negotiations by mid-August. Fortunately, these minor delays do not impact the overall project schedule and we are still targeting project close by year end and construction in the second half of 2015,” he noted.