The Government of Malawi (GOM) with support from the World Bank conducted a Feasibility Study and detailed designing for Mpatamanga Hydropower Plant which is located on Shire River, between the existing Tedzani and Kapichira Hydropower plants. After realising that it was a good and economically viable project, Government then asked World Bank for further assistance to develop the project. The World Bank then sold the project to its investment arm, International Finance Cooperation (IFC), who after reviewing the Feasibility Study Report were interested in investing in the project but not covering the whole cost. IFC proposed to be Co-Developers of the project together with Government, hence signed a Cooperation Agreement (CA) which stipulated the development and signing of a Joint Development Agreement (JDA). The JDA spells out a number of things; roles of IFC and Government, project structure in terms of financing and organisation, the various commercial principles upon which the project will be implemented.
The power plant is designed as a daily storage plant to be operated as a peaking plant and has potential generation capacity of 309 megawatts (MW). However, at this capacity the water release from the plant is at 550m3/s. It is estimated that this release will result into lump up of waters, some kilometres downstream of the plant up to 4m high above the lowest and normal water levels further down the Shire, around Chikwawa and up to Elephant Marsh, this will cause the waters to swell up and down two to three times in a day. This will then disturb the livelihood of the people who depend on farming along the Shire River. Therefore further studies on the flows was instituted by IFC, to determine the maximum flow that will have a 'No Loss Effect' on the environment. The capacity of 258MW at 370m3/s is a recommendation from these studies.
The investment cost of the project is estimated at USD472million and the project will be implemented using a Public Private Partnership (PPP) approach with the construction expected to commence after financial close in June 2020 for a period of 4.5 to 5 years. The financing will be based on 30% equity and 70% loan. As developers of the project, GOM and IFC will also provide equity to the project and all parties will have to meet their costs based on their equity contribution. GOM and IFC will then procure a Private Investor through a tendering process. It is expected that the private Investor will have not less than 50+1 shareholding in the project company. Government has proposed up to 30% Shareholding. Procurement of the private investor is expected to be completed by December 2019. Thereafter parties to the project, GOM, IFC and the Private Investor, will have to solicit funds for the project. The time frame for mobilisation of funds is up to June 2020. This will bring the financial close for the project to an end.
Specifications of the project:
- A reservoir formed by a 45 m high Concrete Fenced Rock-fill Dam;
- A diversion tunnels and a gated spillway;
- 2 low pressure power tunnels with surge shafts and underground penstocks, located at the left abutment;
- Surface powerhouse, housing 6 vertical Francis turbines of the installed capacity of 258 MW at the bus bars;
- 400 kV transmission line, 64 km long, connecting the power plant to the Phombeya Substation.
Benefits from the project:
- Increased hydropower production that will stabilize Malawian power system;
- Cover the presently suppressed power demand;
- Access to the financially attractive source of renewable energy;
- Improve the operation of the downstream located plants (existing and planned): Hamilton Falls and Kapichira;
- Reduce the flood peaks in the areas prone to floods downstream from the dam;
- Cover the existing and future needs for peak capacity and energy on a long run;
- Together with the downstream located plants at Shire River, represent one of key players on the regional power market (SAPP) for provision of peak power;
- Allow the multipurpose operation of the downstream located Kapichira Reservoir, presently prevented;
- Reduce the siltation of Kapichira Reservoir.
- Reduced to no load shedding during peak hours
Current progress
· A task force comprising various key stakeholders was established, where the Department of Energy Affairs is the secretariat.
· GOM procured Cross Boundary as the transactional advisors.
· GOM procured an international legal counsel
· A Cooperation Agreement (CA) was signed by the Ministry of Finance and IFC
· A Joint Development Agreement (JDA) was signed between Government of Malawi and International Finance Cooperation (IFC) who are the co-developers of the project.
· Government and its transactional advisors conducted evaluation for the technical advisor. Further selection processes are underway.