Maputo — The Mozambican government and the Saudi Arabian company ACWA Power signed a concession agreement in Maputo on Friday for the construction of a coal-fired power station in Moatize district, in the western province of Tete.
The power station, which will produce 300 megawatts in its first phase, will be built at the mouth of the gigantic open cast coal mine in Moatize, operated by the Brazilian company Vale. It will use as its raw material the coal mined by Vale which is not of good enough quality for export.
Thus the higher grade coal (particularly coking coal) will be exported, while the lower grade coal will produce electricity in Mozambique.
A second phase will lift capacity to 600 megawatts. The concession is for 25 years, and the estimated investment is a billion US dollars.
The project will be run by Acwa Power Moatize Termoelectrica SA, a consortium whose main shareholders are Acwa Power, Vale and Mitsui of Japan. There are two Mozambican minority shareholders, the Whatana Investment Group (whose chairperson is the former first lady, Graca Machel), with eight per cent and the publicly-owned electricity company, EDM, with five per cent.
245 megawatts of the initial power generated will be used by Vale itself, while the remaining 55 megawatts will be bought by EDM to feed the national electricity grid, according to the chairperson of ACWA Power Paddy Padmanathan.
He added that construction of the power station will start in the second quarter of this year, and it will begin to generate power in 2017.
The power station will create 2,800 jobs during the construction phase, and there will be 160 permanent jobs during the lifetime of the station.
Speaking for the government, Energy Minister Salvador Namburete said that the new power staton will make more electricity available to meet the needs of Mozambique's social and economic development.
Demand for electricity had been rising sharply in recent years, Namburete said, with an ever larger number of beneficiaries being connected to the national grid.