London — The London-based company Ncondezi Energy on Thursday announced that it has reached a binding agreement with the Mozambican government on the future ownership structure of its 300-megawatt power station project tol be built in Moatize district, in the western province of Tete.
Under the agreement, the Mozambican State will own a five per cent equity stake. This is expected to be held by publicly owned electricity company, EDM.
EDM will also have an option to buy an additional ten per cent stake based on commercial terms.
The agreement also paves the way for Mozambican citizens to take at least five per cent of the equity at market prices within five years of the project being commissioned.
Ncondezi has also pledged to promote the participation of a Mozambican strategic investor. In addition, foreign strategic investors will be able to participate on commercial terms.
Unlike neighbouring coal projects, Ncondezi will devote itself to meeting Mozambican demand for electricity, using its own thermal coal. It is thus, unlike other mining companies in Tete, not dependent on the rail and port infrastructure.
Ncondezi's mine will be an open cast operation with a target output of 1.3 million tonnes per annum. This should be commissioned in the second half of 2016 and begin stockpiling for the power plant, which is due to open in the second half of 2017.
The company plans to expand the power plant in stages up to 1,800 megawatts.