Aim-listed Ncondezi Energy has recorded key developments at its integrated 300 MW coal-fired power project and coal mine in Tete, Mozambique, following the formal submission of an updated power tariff on March 31.
Following meetings with Electricidade de Moçambique (EDM), additional work requirements have been agreed upon and an updated development programme has been submitted to EDM for approval.
An updated transmission integration study and Mozambican power market outlook study have also been commissioned and are targeted for completion in the third quarter of this year.
Allowing for the completion of these independent studies, finalisation of the tariff agreement is now expected to occur in the second half of the year.
The shareholders agreement term sheet is expected to be ready for signature in the coming week.
An international audit firm has been appointed by the project’s co-developer, China Machinery Engineering Corporation to undertake the historical cost audit. Work has started, with completion targeted for quarter three of the year.
Engineering, procurement and construction (EPC) contracts are expected to be signed in the third quarter.
"Since the submission of a formal tariff offer earlier this year, the company has worked closely with EDM to discuss and agree the pathway to progress the project.
"Discussions have highlighted that available technical and market assumptions critical to the project are out of date, particularly given the developments in Mozambique and the region over the last two years, including progress with transmission expansion initiatives, updated supply and demand forecasts and, most recently, the potential impact of Covid-19.
"With EDM's guidance, the company has agreed to update its transmission integration study as well as conduct an independent market study for energy supply and demand forecasts in Mozambique and potential export markets. The results of these studies should verify certain technical assumptions and provide greater certainty around the business case for the project alongside the tariff proposal, facilitating negotiations on the project tariff. The results are also expected to be a key requirement from potential project lenders and investor,” said Ncondezi CEO Hanno Pengilly.
He indicated that the independent studies were expected to add at least two months to the project development programme, moving the tariff agreement into the second half of the year.
Based on this, the company has submitted an updated work programme to EDM for review.