World Bank approves US$57 million for the Mozambique-Malawi Regional Interconnector Project
The World Bank has today approved a total of US$57 million meant for Mozambique-Malawi Regional Interconnector Project.
The project whose technical paperwork was signed this year in Lilongwe will interconnect the Mozambique and Malawi transmission systems to enable both countries to engage in bilateral and regional power trade in the Southern African Power Pool (SAPP).
Of this amount, Mozambique will receive US$42 million equivalent as an International Development Association (IDA) grant. Malawi will receive a US$15 million equivalent IDA credit. In addition, Mozambique is expected to receive a grant of US$24 million from a government of Norway Trust Fund administered by the World Bank, along with a Euros 20 million grant from the Government of Germany.
On its part Malawi will receive 20 million Euros through an EU grant. Both the EU and Government of Germany grants shall be administered by Kreditanstalt fur Wiederaufbau (KfW).
“The new Mozambique-Malawi Regional Interconnector project will establish a transmission link between the two countries to meet increasing electricity demand in Malawi and create opportunities for trading in the SAPP,” Dhruva Sahai, senior financial specialist and task team leader of the project said.
Its main undertakings include the construction of a 218 km, 400 kV high voltage alternating current transmission line, grid connections, and associated infrastructure including substation works.
The line starts at Matambo substation in Tete Province, central Mozambique, and ends at Phombeya substation in Balaka in southern Malawi.
With these investments, Malawian households, businesses, and farmers will benefit from increased access to reliable electricity services, that are vital to improve the country’s productivity and competitiveness in the domestic and regional markets.
Mozambique’s utility Electricidade de Mocambique (EDM) will receive additional hard currency revenues, which could be utilised for the country’s ongoing domestic electrification efforts.
“This is an important project for the region. It will create conditions to expand access to millions of people in the region living without electricity, and help decarbonise the Southern African power systems, which are currently dominated by coal generation,” said Deborah Wetzel, the World Bank Director for Regional Integration for Africa, the Middle East and Northern Africa.
The Southern Africa Power Pool (SAPP) is the first and the most advanced power pool in the continent providing an alternative to domestic electricity generation to improve energy security.
This project will fund Malawi’s first interconnection to the SAPP, which has been a priority since the early 2000s with several attempts to translate to reality.
“This project responds to Mozambique’s sectoral priorities to emerge as a regional energy hub, by exporting power to Malawi. It also increases the country’s potential for exporting electricity through the SAPP to many other countries in future,” noted Mark Lundell, World Bank Country Director for Mozambique, Madagascar, Mauritius, Seychelles, and Comoros.
“The project seeks to address Malawi’s sectoral challenges, including chronic electricity supply deficits and ensures security of supply as well as reliability and affordability of electricity through imports from Mozambique and, in the future, other SAPP members,” said Bella Bird, World Bank Country Director for Tanzania, Malawi, Zambia and Zimbabwe.
It also reduces the potential for a power crisis based on droughts affecting the Shire River. It addresses the need for back-up in the form of diversified external sources of power.
In addition to construction of a transmission line and related infrastructure, the project will support capacity building of the electricity utilities of both countries.