AfDB To Serve As Advisor For $4.5bn Mphanda Nkuwa Hydro Power Project In Mozambique

By Eric Ojo

African Development Bank (AfDB) has signed an agreement with Gabinete de Implementação do Projecto Hidroeléctrico de Mphanda Nkuwa, an implementing entity, to provide advisory services for the development of the $4.5 billion 1,500 MW Mphanda Nkuwa Hydro Power Project in Mozambique.

The agreement was signed on the side-lines of the Bank’s Annual Meetings, holding in Accra, Ghana. It was signed by Mr Carlos Yum, Director of Gabinete de Implementação do Projecto Hidroeléctrico de Mphanda Nkuwa and Dr. Kevin Kariuki, African Development Bank Vice President for Power, Energy Climate and Green Growth.

President Filipe Nyusi of Mozambique and African Development Bank President Dr. Akinwumi Adesina witnessed the signing. Gabinete de Implementação do Projecto Hidroeléctrico de Mphanda Nkuwa is part of the Mozambique government’s Ministry of Natural Resources and Energy. 

The agreement consolidates the Bank’s role as Africa’s premier development finance institution, and as a trusted partner and provider of advisory services and assistance in the development of transformative projects.

The project entails development of a hydropower plant to  be located on the Zambezi River in the Marara District of the country’s Tete Province. The plant will be 60 km downstream from Cahora Bassa dam and 70 km upstream from Tete city. A transmission system comprising 1,300 km of 550kV high voltage DC transmission line between Cataxia and Maputo will also be constructed.

The Mphanda Nkuwa project is expected to reach financial close by end of 2024 while the commissioning is anticipated in 2031.

Continued expansion of Mozambique’s generation capacity is required to meet growing domestic demand and drive economic and social development. In addition, the southern Africa region offers market opportunities that Mozambique is well placed to meet as a supplier of competitively produced energy. Mphanda Nkuwa is projected to have one of the lowest electricity production costs in the region.

The project builds on earlier success in attracting  private investment into the country, including several independent power producers (IPPs). These include the 175 MW Central Térmica de Ressano Garcia,  the 120 MW Central Térmica de Gigawatt, the 40 MW Mocuba solar plant, the  40 MW Metoro solar plant and, most recently, the 450 MW Temane Power Project.

Mphanda Nkuwa project is included in Mozambique’s National Energy Sector Master Plan 2018–2043 as a national priority, as well as a priority investment for the Southern Africa Power Pool Plan. The project enhances private sector competitiveness through infrastructure development and regional energy trading. It is also aligned with the Bank’s 10-Year Strategy, as well as the “Light Up and Power Africa High-5 strategic priority.

While speaking at the signing ceremony, Mr. Yum said the partnership with African Development Bank further strengthens the capacity of our implementing agency to develop the Mphanda Nkuwa project.

“The African Development Bank will ensure that world class environmental, social and governance and associated standards are adhered to during the development, and that the project is attractive to reputable developers, financiers and investors to ensure competitive and least-cost power for Mozambique and the region”, he said.

Similarly, Dr. Kariuki said: “the project reinforces our efforts to combat climate change in a region that is desperately short of power but equally in need of transformation and a just energy transition. It is also a great privilege to lead the Bank’s team that will be executing this advisory mandate. We are honoured to be chosen by Mozambique to partner on this important project”.