The Mozambique government has approved the construction of a 600 MW thermal power plant at Moatize, in Tete province.

The plant, variously reported by Mozambique media as costing $1-billion, or €727-million, or 30-billion meticais, will burn thermal coal produced by Brazilian mining major Vale’s Moatize mine.

The project will be implemented by Mozambique-domiciled company Acwa Power Moatize Termoeléctrica (APMT). This company is a joint venture between Saudi Arabian enterprise Acwa Power, Vale, Japan’s Mitsui and two Mozambique companies. The local partners are State-owned electricity utility Electricidade de Moçambique (EDM), with a 5% share, and the private-sector Whatana Investment Group, which holds 8%. (The chairperson of the Whatana board is none other than Graça Machel.)

Acwa Power reports on its website that the project is being developed on a build, own, operate and transfer basis. It will be the only coal-fired power station in the country and will be executed in two phases. Phase 1 will have a generating capacity of 300 MW. Of this, between 200 MW and 250 MW will be assigned to Vale to power its mining and related operations, while between 50 MW and 100 MW will go to EDM and the national grid.

Announcing government’s decision, Energy Minister Salvador Namburete reported that the construction of the power plant should take three years. The concession for the plant was 25 years. The project would create 1 200 construction jobs and the operation of the plant 120 jobs.

The thermal coal that will feed the new power station is effectively a by-product of Vale’s Moatize operation, which produces mainly metallurgical or coking coal. The metallurgical coal is exported, the thermal coal is not. Namburete pointed out that, if the thermal coal was not burnt in a power station, it would simply be stockpiled near the mine. This would cause environmental problems.

Regarding Mozambican participation in APMT, the Minister noted that the country’s public–private partnership law “states that, by the fifth year from the start of operations, 5% should be reserved for sale through the stock exchange to individual citizens – so this will happen during [the] implementation of the project”. This would increase the local shareholding to 18%.

He also highlighted that the project, by increasing power generation in the country and diversifying power supply, would help the development of the country and of the local communities. Namburete gave the country’s current power generation capacity as some 2 000 MW, mostly from the Cahora Bassa hydroelectric power station.

The proposal for the thermal coal power plant at Moatize was first reported in 2008. These reports stated that the plant would have a capacity of 2 400 MW and the consortium that would build it would by led by US energy group AES. It was expected that the plant would have been commissioned in 2013. It is not clear if it is intended that the plant now authorised would be expanded, in due time, to 2 400 MW. It is also not clear if AES still is, or ever was, involved in the project.

Separately, Swiss-based global automation and power technologies group ABB has forecast that Mozambique’s electricity demand is going to increase between 10% and 15% a year, as a result of the country’s industrial development, construction demand and economic development. The prediction was made at the recent announcement of a $20million contract for ABB to supply equipment for the construction of two new electrical substations and the refurbishment of nine others for EDM.