The Government of Mozambique, Electricidade de Moçambique (EDM) and its project partners have announced that funding for the development of the Temane Regional Electricity Project (TREP), has been secured.
Project partners including Globeleq, eleQtra, and Sasol celebrated the agreement of various grants, loans and guarantees for the transmission line and substation components of the TREP.
In a company statement, Globeleq explained that this was agreed with a group of development financing institutions, including the World Bank, the Government of Norway (through the Norwegian Trust Fund managed by the World Bank), Islamic Development Bank, African Development Bank, and the OPEC Fund for International Development (OFID).
The Development Bank of Southern Africa is currently finalising its financing agreements with the Government.
The project involves the construction of a 400kV high voltage transmission line, stretching from Vilanculos to Maputo, along with three new substations at Vilanculos, Chibuto and Matalane and upgrades to the Maputo substation.
The transmission line will then connect to the new 420MW gas-fired power plant to be constructed at Temane, for which a separate financing process is currently underway.
Gas will be supplied by Sasol and ENH from the PSA gas field and electricity will be sold to EDM under a 25-year tolling agreement.
Together, the power plant and transmission line will bring in $1.4 billion in new investment into the Mozambican power sector.
The total funding facility of nearly $543 million for the transmission line and related substations (the Temane Transmission Project), includes a $300 million grant from the World Bank; a $24 million grant from the Norwegian Trust Fund; a further $33 million grant provided by the African Development Bank; a $99.7 million lease and loan through the Islamic Development Bank; and a contribution from OFID of $36 million.
In addition, the total funding facility is expected to secure a $50 million loan from the Development Bank of Southern Africa (DBSA) in partnership with the European Union through its Infrastructure Investment Programme South Africa (IIPSA).
The DBSA’s loan facility was approved by its Board of Directors, with the funding agreements currently being under negotiation and finalisation. In addition, the World Bank has also committed a guarantee of $120 million in support for the wider TREP project.
The World Bank Country Director for Mozambique, Mark Lundell commented on behalf of all of the participating DFI’s involved with the project’s funding: “It is fundamental to developing the Mozambican domestic power system, expanding energy access, and ensuring the secure, affordable, and sustainable power supply that is one of the key drivers of Mozambique’s economic and social development.”
“We are extremely pleased to be working with the Government and our partners, EDM and Sasol, on the Temane project,” commented Globeleq’s CEO, Paul Hanrahan, speaking on behalf of the Temane Energy Consortium which is developing the Temane power plant. “Securing the financing agreements for the transmission portion of the project builds incredible confidence amongst private investors. The Temane power plant will provide reliable baseload power at an extremely competitive price for the benefit of the people of Mozambique.”
EDM’s Chairman, Aly Sicola Impija, said, “Signing of these financing agreements represents a significant step forward in realising this important project, thereby contributing to the Government’s goals of universal access by 2030 and positioning of Mozambique as a regional energy hub.”
Sasol’s Managing Director for Mozambique, Ovidio Rodolfo, added: “Sasol is committed to contributing meaningfully to the industrialisation ambitions of Mozambique.
“We celebrate the success in securing financing support for the transmission portion of TREP and are proud to be working with our partners, EDM and the Globeleq consortium in realising this important initiative.”