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The government in Maputo through the state-run power utility, Electricidade de Moçambique (EDM), on Friday formalised an agreement with the German Development Bank (KFW) to finance the Mozambique-Malawi Interconnection Project, APA can report.
Mozambique’s share of the credit is $45 million and involve the installation of a 135-km, 220 kilovolt power line from the Matambo substation to Phombeya in Malawi.
On the Malawi side, about 75 km of 220 kilovolt transmission line will be built and a new 220 kilovolt substation installed at Phombeya.
As the second phase of the Southern African Power Market Program, the Mozambique-Malawi interconnector project will connect Malawi to the Southern African Power Pool (SAPP), allowing two-way energy trade between the two countries.
The SAPP oversees electricity trade among member countries in southern Africa.
This will ensure much-needed diversification in Malawi’s electricity supply and allow the export of any off-peak power surpluses.
It will also provide Mozambique’s energy sector with a new revenue source,
The corresponding Energy Purchase Agreement and the other technical-commercial agreements between EDM and the Malawi electricity utility (ESCOM) were signed last April in Blantyre.
German Financial Cooperation, through KfW, will support EDM in the installation of a new 400kV substation in Matambo and the construction of a 400kV 142km transmission line to link the Matambo substation with the Malawi part.
The total cost of the Mozambican part of the interconnection program amounts to $100 million.
The German Government has donated €30 million, which will be channeled through KfW.
The World Bank will donate $42 million to Mozambique for the same project.
In addition, an additional $ 24 million from Norway will be channelled through the World Bank.
The project is of strategic importance to Mozambique as it contributes to greater diversification of energy transactions.
Landmark agreement signed for 218km transmission line between #Mozambique and #Malawi: @BMZ_Bund through @KfW commits grant of € 30 million to the project. New line will connect Malawi to the Southern Africa Power Pool for the first time. @GermanyInAfrica pic.twitter.com/JQeFIdYriB
— Julia Crause (@KfW_Maputo) August 16, 2019
Mozambique’s Minister of Mineral Resources and Energy, Max Tonela, told APA in a brief interview on Friday that signing the agreement creates the necessary conditions for Malawi to become an operational member of SAPP.
“Mozambique is rich in conventional and renewable sources of energy and presents itself as a regional energy hub, so the interconnection between Mozambique and Malawi provides access to the regional market, enabling large energy projects in Mozambique to become viable,” he said.
He added: “Malawi will thus be able to participate equally with all other Member States in regional electricity trade, including importation and exportation to the regional market. In fact, it is another important step towards regional integration in the context of the Southern African Development Community,” says Tonela.
German Ambassador to Mozambique, Detlev Wolter, said that that “reliable transmission and cross-border marketing of electricity is in the interest of all SAPP member countries. It will contribute to better conditions for households and businesses. In so doing, it will promote the economic development of the entire southern African region. ”
The financing program will also support EDM in the acquisition and installation of OPGW on the new transmission line, as well as two other existing transmission lines (832 km long).
These measures contribute to the automated monitoring and management of the electricity grid, as well as to the improvement of telecommunications services.
Like elsewhere in Africa, both countries have been plagued by chronic electricity shortages and the project is another step in the development of a southern African power grid.
The southern African region has struggled with energy shortages that threatens to affect industrial growth in a region that has some of Africa’s fastest growing economies.
Power utilities throughout the region are struggling to cope with increasingly frequent blackouts hampering operations at businesses and homes.Source: APA
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