Funding Approvals & EPC Selection Moves Mozambique's Temane Power Project Forward

Source: 12/10/2020, Location: Africa

The Temane regional energy initiative (the Temane initiative) is making significant progress, after a substantial portion of the debt funding requirements have been secured for the Central Termica de Temane (CTT) power project in Mozambique. The funding approvals are another major milestone for the Temane initiative, an energy project initiated by Electricidade de Moçambique (EDM) to ensure Mozambique's energy security.

Located at Temane in Inhambane Province, CTT will be a 450 MW gas-fired power plant supplying low cost, reliable power to EDM through a 25-year tolling agreement. Gas supply will come from the PSA concession at the Pande-Temane Inhassoro fields operated by Sasol Petroleum Mozambique Limitada. Globeleq is the lead developer along with its partners EDM, Sasol Africa Limited and eleQtra.

CTT will receive funding of up to US$200 million from the U.S. International Development Finance Corporation (DFC) and up to US$50 million from the OPEC Fund for International Development (OPEC Fund) once execution of the loan agreements and other closing conditions have been finalised. The International Finance Corporation is expected to provide the balance of the required debt financing and is in the process of finalizing its approvals.1

The technical solution for the project has also been finalised. Through a competitive procurement process, the Spanish contractor, TSK, has been selected to design and construct the power plant, which will use efficient and well-proven Siemens gas turbines. TSK has extensive experience in designing similarly-sized combined-cycle power plants utilizing the Siemens turbines.

"Mozambique faces one of the lowest electrification rates in the world," said Edward Burrier, DFC Executive Vice President for Strategy. "This project will reduce the cost of electricity, increase power generation, and address a critical development challenge for the people of Mozambique. We are proud of our partnership and look forward to this important project moving forward."

Abdulhamid Alkhalifa, Director-General of the OPEC Fund, said: "We are pleased to be working with our development partners to bring such a landmark public-private partnership project to life in Mozambique, a country that we have supported since 1976. This is the third project we have co-financed in Africa where Globeleq is the sponsor. Our private sector loan facility complements a public-sector term loan we recently extended to Mozambique's government to finance 563 km of associated transmission infrastructure. Once completed, the Temane initiative will increase the supply of efficient and affordable energy to households, businesses and industries contributing to social and economic development in Mozambique and the region."

Mike Scholey, CEO of Globeleq, said: "the Temane initiative is an absolute regional game-changer. It will ensure a reliable and affordable power supply - crucial elements for economic and social development. CTT will provide electricity access to millions of people in the region."

CTT will anchor the development of the 563km high-voltage transmission line and associated transmission infrastructure (the Temane Transmission Project or TTP). Together, with the gas supply and related value chain investment, the entire project will see an investment in excess of US$2 billion. Funding for the TTP project was secured in July 2019 with grants and guarantees from the World Bank, the Norwegian Trust Fund, African Development Bank, Islamic Development Bank and the OPEC Fund.

Eng. Marcelino Gildo Alberto, Chairman and CEO at EDM commented: "The Temane initiative remains a key strategic priority of EDM and the Government of Mozambique. We remain committed to delivering this important CTT project, thereby contributing to the Government's goals of universal access by 2030 and positioning of Mozambique as a regional energy hub."

"Sasol remains a proud partner in in the Temane initiative which we believe will meaningfully contribute towards economic development in Mozambique," Priscillah Mabelane, Executive Vice President of Sasol's Energy Business, commented. "We celebrate the success in achieving this significant milestone."

Gad Cohen, CEO of eleQtra, said: "We are delighted that the project has achieved this critical milestone with the approval by the US DFC and the OPEC Fund. It is another example where the partnership between the private sector and financing institutions such as DFC and the OPEC Fund can overcome the critical challenges facing the energy sector of countries such as Mozambique."

CTT is expected to achieve Financial Close by Q2 2021 and provide first power in Q4

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