Construction of Mpanda Nkuwa dam in Mozambique depends on South Africa

18 May 2010

Maputo, Mozambique, 18 May – The project to build the Mpanda Nkuwa hydroelectric dam (HMN), in Mozambique, depends on the guarantee that the electricity will be acquired by South African electricity company Eskom, the chairman of HMN told newspaper O País.

Egídeo Leite, chairman of HMN, the company set up to manage the future hydroelectric facility, told the paper that in order for the dam to be viable it had to be part of Eskom’s plans to obtain electricity.

Leite noted that Mpanda Nkuwa, “is one of the projects vying for inclusion in the IRP2 list, which is the power plan for South Africa for the next five years,” and added that the selection would be announced in June.

Only then, Leite said, would it be possible to sign a power supply contract with Eskom and only with that contract in hand would it be possible to fund the dam’s construction.

“That being the case, start of construction of Mpanda Nkuwa in 2011 is entirely dependent on South Africa,” said the HMN chairman.

However, he said he was confident that South Africa would purchase electricity from Mpanda Nkuwa, as the dam would produce clean energy within a regional market that gets most of its electricity, particularly in South Africa, from coal-fired power plants.

Leite also said that so far HMN had been working with the Standard Bank (the oldest retail bank in Mozambique) with a view to contacting other institutions that may be interested in funding the project.

Press reports have repeatedly said that China’s Exim Bank would fund construction of Mpanda Nkuwa but Leite told O País he had no information that the Chinese bank had contacted the Standard Bank.

The total cost of Mpanda Nkuwa is estimated at US$2.9 billion, a figure that includes the transmission line to the Matabo sub-station, which will link up to the South African grid.

HMN’s shareholders are Brazilian group Camargo Corrêa, with 40 percent, Energia Capital 8of Mozambican group Insitec), also with 40 percent, and Electricidade de Moçambique with the remaining 20 percent. (macauhub)