Landmark project will boost electricity transmission between central and northern regions of Mozambique
An agreement to deliver Phase II and III of the Chimuara-Nacala power transmission project in Mozambique was announced today by Gridworks and the Mozambican electricity utility, Electricidade de Moçambique (“EDM”).
The project will be invested in and developed by Gridworks, a subsidiary of British International Investment, the UK’s development finance institution and impact investor. Gridworks has been collaborating with EDM for 18 months on the project, which will strengthen and increase the reliability of the transmission infrastructure connecting central and northern regions of the country (between Chimuara, in Sofala province and Nampula and Nacala in Nampula province).
The project infrastructure includes a 400kV transmission line from Alto Molócuè-Namialo (272 km), a 220kV transmission line from Namialo – Nampula (98 km) and a 220kV transmission line from Namialo – Nacala-à-Velha (90 km), with two new substations at Namialo and Nacala-à-Velha and the expansion of the Nampula substation.
With only half of the population having access to electricity, the Chimuara-Nacala project is a priority for Mozambique, and Gridworks’ involvement reflects the Government’s desire to attract private sector financing for the development of its key infrastructure. The project is being built in three phases, with construction of Phase I by EDM already ongoing.
Today’s announcement also sits firmly within the remit of a new national energy transition strategy announced by President Filipe Nyusi at the COP28 summit in Dubai, in which he called for investment partners to support the country’s move to exploit its abundant renewable energy sources.
An investor in Africa’s electricity transmission & distribution sector, Gridworks is developing a series of ground-breaking projects to bring clean, affordable and reliable power to Africa’s people and its businesses. These include:
Moyi Power: an ambitious program to build greenfield, solar-powered utilities providing electricity to a million people in three isolated cities in northern DRC.
Virunga Power: an African utility that develops, invests, and operates distributed renewable power generation and grid distribution projects that bring reliable and low-cost power to rural communities across southern and eastern Africa.
Amari Power Transmission: one of Africa’s first privately financed transmission projects, Amari is an independent transmission project in Uganda that will upgrade four key substations on the grid. Amari is at the forefront of a new wave of Independent Power Transmission (“IPT”) projects that offer African governments an alternative way of funding critical infrastructure without needing to increase government borrowing.
Alongside Amari, and a previously announced initiative in Tanzania, Gridworks is working on a pipeline of IPT projects across the continent. Today’s announcement is the latest one and supports the Government of Mozambique’s plans to improve power access and reliability.
Expected Impact:
- Economic Development: the project will significantly improve the quality of power supply and electricity in the central and northern regions of Mozambique, especially the provinces of Zambezia and Nampula which have the lowest electricity access rates in the country (25% and 18% respectively).
- Industrial Growth: by increasing the reliability of the grid, the project will also enable industrial growth. The northern areas of Mozambique, in particular the Nampula-Nacala area, have experienced significant industrial electricity demand. However, the required capacity of the transmission infrastructure far exceeds the transfer limit on the existing system. The project will therefore enable industrial growth of the central and northern provinces, especially the Nacala Special Economic Zone, and help stimulate additional demand.
- Climate: the transmission upgrades will help to ensure that increasing demand for energy can be met through electricity from existing and new hydropower and solar plants. Across Mozambique there are significant hydro, solar and wind growth plans, particularly in the north of the country. The strengthening of the Northern grid will enable greater penetration of renewables in Mozambique over time. The country’s President, Felipe Nyusi recently announced a major energy transition strategy at the COP28 summit in Dubai.
- Supporting Market Development: this project will be the first private sector transmission project in Mozambique and it will create a precedent for further projects should the Government of Mozambique wish to finance more infrastructure in this way.
There is a growing global consensus that transmission infrastructure will play a critical role in supporting the clean energy transition. Investment in grid stability and transmission is vital to supporting an increased percentage of renewables in the generation mix, and to connecting areas of high renewable generation potential with areas of high electricity demand. However, unlike the rest of the world, well-funded transmission infrastructure in Africa will also deliver much-needed improvements in access to electricity for households and businesses.
IPTs are a new asset class in Africa that Gridworks and others expect will develop in a way comparable to the Independent Power Production (IPP) market, which is now well established and regulated across the continent. Like most IPT projects that use equity funding from their developers, this project will also be financed with several hundred million dollars of debt funding, much of it in the form of climate finance.
Chris Flavin, Interim co-CEO of Gridworks said:
“This project sees Gridworks working alongside the Government of Mozambique and EDM, to deliver critical infrastructure that will have important climate and economic benefits for the people of Mozambique.
“Transmission infrastructure is capital intensive and increasing available sources of finance for it is vital. It’s important that pools of private capital from development banks, infrastructure funds and pension funds support this nascent market so that African governments have access to the same funding models that have been used successfully in other markets in the past.”
Eng. Marcelino Gildo Alberto, EDM’s Chairman and CEO, said:
“We are delighted to announce this landmark partnership with Gridworks, which marks a significant step forward in our efforts to develop Mozambique’s Electricity Transmission infrastructure. Phases II and III of the Chimuara–Nacala Power Transmission Project are crucial for bridging the energy gap between our Central and Northern regions, fostering economic development, and supporting our industrial growth. This project aligns with our National Energy Transition Strategy and underscores our commitment to leveraging Private Sector investment for critical infrastructure development. By improving the reliability and capacity of our grid, we are paving the way for a brighter, more sustainable future for Mozambique. EDM looks forward to this project’s transformative impact on our communities and economy.”
Chris Chijiutomi, Managing Director and Head of Africa at BII, said:
“Investing in transmission infrastructure is as vital a component of delivering affordable energy as is providing additional renewable energy generation in the continent. This strategic project once completed will make a huge difference to so many people in Mozambique.”
His Majesty’s Trade Commissioner for Africa, John Humphrey, said:
“It’s great to see UK companies working with public and private institutions in Mozambique to deepen our already strong trade and investment partnership, create jobs and drive inclusive, sustainable economic growth. The Chimuara – Nacala electricity transmission project being developed by Gridworks is one of the multiple ways the UK is supporting Mozambique’s Energy Transition Strategy, launched at COP28.”
The British High Commissioner to Mozambique – H.E. Helen Lewis, said:
“We are proud of UK companies and their work in partnership with the Government of Mozambique to support inclusive and sustainable economic growth, ensure no one is left behind and build a prosperous future for both our countries.”
Media contact:
Rhyddid Carter, Head of Communications ([email protected])