The project seeks to interconnect the Mozambique and Malawi transmission systems to enable both countries engage in bilateral and regional power trade in the Southern African Power Pool (SAPP).
According to the statement released by the World Bank, Malawi will get a total of K26.8 billion which is made of a $15 million credit from International Development Association (IDA) and 20 million Euros grant from the Government of Germany.
The statement discloses that Mozambique will get a total of K47.7 billion which is a combination of two grants $42 million from IDA and $20 million Euros from Government of Norway trust fund.
Both the EU and Government of Germany grants shall be administered by Kreditanstalt fur Wiederaufbau (KfW).
“The new Mozambique-Malawi Regional Interconnector project will establish a transmission link between the two countries to meet increasing electricity demand in Malawi and create opportunities for trading in the SAPP”, said Dhruva Sahai, Senior Financial Specialist and Task Team Leader of the project is quoted in the statement.
Through the project a 218 km, 400 kV high voltage alternating current transmission line will be constructed , grid connections, and associated infrastructure including substation works.
The line starts at Matambo substation in Tete Province, central Mozambique, and ends at Phombeya substation in Balaka District in southern Malawi. With these investments, Malawian households, businesses, and farmers will benefit from increased access to reliable electricity services that are vital to improve the country’s productivity and competitiveness in the domestic and regional markets.
Mozambique’s utility Electricidade de Mocambique (EDM) will receive additional hard currency revenues, which could be utilized for the country’s ongoing domestic electrification efforts.
“The project seeks to address Malawi’s sectoral challenges, including chronic electricity supply deficits and ensures security of supply as well as reliability and affordability of electricity through imports from Mozambique and, in the future, other SAPP members,” said Bella Bird, World Bank Country Director for Tanzania, Malawi, Zambia and Zimbabwe.
It is also worthwhile to note that the project reduces the potential for a power crisis based on droughts affecting the Shire River. It addresses the need for back-up in the form of diversified external sources of power. In addition to construction of a transmission line and related infrastructure, the project will support capacity building of the electricity utilities of both countries.
The World Bank’s International Development Association (IDA) was established in 1960 and helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives.