Government approves EDM’s acquisition of a majority stake in the Mphanda Nkuwa hydroelectric plant

On Thursday (12), the Mozambican government approved a resolution authorizing Electricidade de Moçambique (EDM) to acquire 70% of the shares in the Mphanda Nkuwa hydroelectric plant, in a deal valued at 4.5 billion euros (316 billion meticais). This move marks a crucial step towards consolidating one of the largest renewable energy projects in the country.

Filimão Suazi, spokesperson for the Council of Ministers, announced the decision after the body’s 27th ordinary session, held in Maputo. “This is the first step in authorizing EDM to acquire the stakes of the other shareholders, and all the other steps will take place afterwards,” said Suazi.

Carlos Yum, director of the project office, said that the financing needed to build the Mphanda Nkuwa Hydroelectric Power Plant, valued at 4.5 billion euros, is in the final stages of negotiation, with guarantees expected by the end of this year. “At the moment, we’re dealing with the specifics of the expressions of interest in financing the project. We can say that things are going well,” said Yum.

Of the total of 5 billion dollars (316 billion meticais) needed to build the hydroelectric plant, 1.3 billion dollars (82.16 million meticais) will be financed by the consortium that will manage the project, while the remaining amount will be guaranteed by financial institutions, with “financial closure” scheduled for the end of the year. “The size of the project requires institutions with financial capacity,” added Yum.

The government plans to complete construction of the hydroelectric plant in five years, with the infrastructure set to begin operations in 2031. The project includes a hydroelectric plant with a production capacity of 1500 Megawatts (MW) and a high-voltage transmission line that will connect Tete to Maputo, along a route of approximately 1350 to 1400 kilometers.

“The project is fundamental to Mozambique’s energy transition strategy,” said Yum, noting that the hydroelectric plant will be powered by a renewable source of water. He also assured that construction will follow strict environmental, social, economic and financial sustainability standards, involving local communities.

Despite facing criticism from some environmental organizations, the Mphanda Nkuwa Hydroelectric Plant will be built 61 kilometers downstream from the Cahora Bassa Hydroelectric Plant (HCB), which remains the largest in the country, with a production capacity of 2075 MW.

In December last year, the Mozambican government and a consortium led by Electricité de France (EDF) signed agreements for the implementation of the Mphanda Nkuwa hydroelectric project.