Aim-listed Ncondezi Energy’s 300 MW Ncondezi power project, in Tete, Mozambique, is now included in the country’s electrification and power generation strategy, the company said on Tuesday.

Ncondezi had, in December last year, fulfilled all conditions precedent to the Power Framework Agreement with the local government and had, therefore, received a formal endorsement of the project from the Mozambique government.

Ncondezi said 100% of the project’s initial 300 MW gross output was expected to be supplied to Mozambique’s State-owned electricity provider Electricidade de Moçambique (EdM), providing a significant boost to the country’s northern grid, which was one of its fastest growing regions in terms of energy demand.

For the power framework agreement to become binding, the company had signed a number of heads of terms (HoTs) agreements and had agreed on the key parameters of the project.

“This includes confirmation that EdM will be the power plant's exclusive purchaser of electricity through a commercial tariff structure. In addition, binding HoTs were signed for the power-plant project vehicle which provides for an agreed government and local participation mechanism, the final details of which are expected be negotiated during 2014,” Ncondezi chairperson Michael Haworth said in a statement.

He noted that the company would enter a final round of negotiations to turn the HoTs  agreements into binding commercial agreements during the second quarter of this year.

Ncondezi continued to target project close by the end of the fourth quarter of this year to start construction of the power plant during 2015, with commissioning expected in the second half of 2012 and commercial operations in the first half of 2018.

Meanwhile, with regard to the Ncondezi coal mine, Haworth said the emphasis over the past year had been on improving the efficiency of the development of a smaller openpit mining operation, initially focused on supplying the first 300 MW power plant.

The openpit mining operation would be operated and managed by a contractor for which Ncondezi had received final binding quotes during the first quarter of this year, with mining operations expected to start in 2017.

"The Ncondezi project gained significant momentum during 2013 as we achieved a number of key milestones with the signing of HoTs on all key commercial agreements for the power plant project and the receipt of our mining concession. This enabled the power framework agreement, which sets out the timetable and requisite government and developer milestones to project and financial close, to become binding,” Ncondezi CEO Paul Venter said.

He pointed out that this accelerated pace of development had continued in the first half of 2014 as “we seek to conclude final negotiations on the power concession, the power purchase agreement, the coal supply agreement and the codeveloper process”.