Maputo — Mozambique's publicly owned electricity company (EDM) will advance the disbursement of three million dollars for the construction of a new hydro-electric dam at Mphanda Nkuwa on the Zambezi River, about 60 kilometres downstream from the existing dam at Cahora Bassa.

The disbursement is based on an agreement signed by HCB and Hidroelectrica de Cahora Bassa (HCB), the public company that operates the Cahora Bassa dam.

"The amount corresponds to EDM's co-participation and it must be made available by the end of the financial closure of the project. The costs of the project development are supported by EDM and HCB, the companies chosen by the government', reads the EDM document.

In May, the Mozambican government chose a consortium led by Electricity of France (EDF) as its preferred partner for building the Mphanda Nkuwa dam and power station.

The EDF consortium will hold 70 per cent of the shares in the Mphanda Nkuwa operating company, HMN. The other 30 per cent will be divided equally between EDM and HCB.

"The project will be an option for the high cost of electricity generation, and it may strengthen Mozambique's position in the sector of power export in the region', says the document.

The country's power sector currently has a capacity to generate 2,750 megawatts, and with Mphanda Nkuwa dam in operation, it is expected that the country will generate 4,300 megawatts.

The project includes a power station with an installed capacity of producing 1,500 megawatts, and a high voltage electricity transmission line running for 1,300 kilometres, from the Zambezi Valley to Maputo.