Mozambique, Zimbabwe and Botswana are about to take a significant step forward in the region’s energy integration, with the implementation of a project led by South African company Coven Energy in collaboration with the National Oil Company of Zimbabwe (NOIC). The project, estimated at 3 billion dollars, aims to build an oil pipeline that could redefine the energy landscape in southern Africa.

According to BNN Bloomberg, this venture is seen as a testament to the region’s commitment to improving energy security and economic integration. NOIC will secure a 50% stake under a joint venture agreement, with the project’s financial underpinnings showing a combination of equity and loan-based financing.

Eddie Cross, a former advisor to Zimbabwean statesman Emmerson Mnangagwa, highlighted the phased implementation plan, which starts with strengthening the capacity of the Port of Beira, which is fundamental to meeting the region’s growing fuel import needs.

Despite the substantial groundwork already done, including an investment of 2 million dollars in feasibility studies, the full realization of the project depends on obtaining approvals from all participating nations, including Mozambique.

To propel the project into the next phase, which covers the expansion of the pipeline infrastructure to Harare and beyond, an inter-ministerial committee has been set up to facilitate dialogue and coordination between stakeholders.

The implementation of this project could significantly change southern Africa’s energy distribution networks, increasing efficiency by reducing dependence on road transportation.

However, the road to achieving this ambitious goal is fraught with complexities, requiring nuanced negotiations and adaptive strategies to navigate geopolitical and financial scenarios. The outcome of this project could serve as an indicator for regional cooperation in Southern Africa, offering valuable lessons in harmonizing economic ambitions with practical realities.

The Temane Thermal Power Plant (CTT), a project budgeted at 650 million US dollars, which will produce 450 Megawatts of electricity, is scheduled to come on stream this year, according to information from the government and the project plan.

CTT is the first gas-fired power plant of this size to be built in the country after independence. It will represent an important milestone, producing clean energy at a time when Mozambique is developing its Energy Transition Strategy.

Construction, which began in March 2022, is progressing according to plan, with execution currently at over 60%. The start of operations is expected to remain unchanged, bringing the plan to produce energy from natural gas from the Pande, Temane and Inhassoro fields ever closer. This will enable the generation of energy to feed the country and export to the region.

This project is expected to increase the country’s installed energy production capacity by around 16%, helping to meet the demand of around 1.5 million families under the Universal Access to Energy Program by 2030.

The initiative is part of the government’s policy, which prioritizes industrial development, using natural gas and creating an attractive legal framework for investors.

A public-private partnership, made up of Globeleq, Electricidade de Moçambique and SASOL, was awarded a concession valid for 25 years for this project, and the asset will be transferred to the Mozambican state at the end of the contract.

The Minister of Mineral Resources and Energy, Carlos Zacarias, said that the construction of the country’s largest gas-fired power plant was almost complete, with the expectation that the infrastructure would come into operation this year (2024).

As well as using natural gas, the project will reuse the steam generated to produce an additional amount of electricity. As part of the same project, a transport line is being built between Temane, in Inhassoro, and Maputo province, with a length of 563 kilometers and a cost of over 400 million dollars.

CTT is 85% owned by Mozambique Power Invest (MPI) and 15% by Sasol Africa, with MPI owned by Globeleq (76%) and EDM (24%).

Lenders to TotalEnergies SE’s Mozambique Liquefied Natural Gas (LNG) project are considering releasing billions of dollars in financing as the company plans to resume construction, three years after development was halted due to attacks by Islamic insurgents.

The planned onshore facility to export major gas discoveries attracted the largest project financing ever seen in Africa. That was before attacks by Islamic State-linked militants near the site in 2021 led Total to evacuate its staff and declare force majeure.

The US Export-Import Bank (Exim), which has committed to most of the 4.7 billion dollars in financing – and other creditors, totaling around 15 billion dollars in debt – are conducting assessments on reactivating the financing, as reported by Bloomberg. TotalEnergies CEO Patrick Pouyanne said last month that the company had made progress with suppliers and contractors towards a mid-year restart. Previously, the target was the end of 2023.

“Exim continues to work with its financial partners and borrowers to carry out due diligence for the Mozambique LNG project in relation to the proposed projects and restart amendments to the financial documents,” the bank said.

The assessment of the possibility of resuming financing coincides with a decision by the Joe Biden administration in January to suspend the approval of new Liquefied Natural Gas export licenses, recognizing that the climate impact of the fossil fuel needs to be reassessed. The US Exim Bank loan for the LNG project was initially granted in 2020, during the administration of former President Donald Trump.

Exim said it seeks to align itself with Biden’s climate agenda while still meeting its statutory requirements, including a prohibition on discrimination based solely on industry, sector or business, and its mission to support US jobs, adding that any changes to its charter require congressional action.

Although Russia’s invasion of Ukraine has led Europe to seek alternative energy sources, increasing interest in future LNG production, projects in African countries remain susceptible to a number of problems, including political instability and construction delays. Mozambique has the additional obstacle of an insurgency that has been subdued by the armed forces, although Islamic fighters continue to carry out sporadic deadly attacks.

A series of attacks since December has marked an upsurge in violence, after national and regional forces last year announced major gains in the six-year conflict, which has left almost 5,000 people dead. The deadliest recent attack took place around 136 kilometers (85 miles) south of the LNG project and subsequent attacks have been much further away.

Since the last outbreak of violence and attacks on civilians in early February, more than 70,000 people have been forcibly displaced in Cabo Delgado, the UN Refugee Agency said in a statement last Friday, March 1.

Atradius Dutch State Business, the Dutch export credit agency based in Amsterdam, which has committed one billion dollars to Mozambique LNG, said that they are also assessing the situation.