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Malawi and Mozambique: Cross Border Electricity Exchange

News from 2019-08-20 / KfW Development Bank

Signing of Grant Agreement between the Government of Mozambique and German Financial Cooperation through KfW Development Bank for the Mozambique Malawi Interconnector Project

signing contract EDM/KfW
Cross-border, reliable electricity transmission and electricity trading will contribute to better conditions for households and businesses.

The CEO of the national power utility, Electricidade de Moçambique (EDM), and the KfW Country Director in Mozambique signed a grant agreement of EUR 30 million for the financing of the Mozambique-Malawi Interconnector Project in Maputo on 16 August 2019. The project consists of a 218 km long transmission line between Matambo (Mozambique) and Phombeya (Malawi).

The new transmission line will connect the Malawian and Mozambican electricity grids. It will also, for the first time, connect Malawi to the Southern African Power Pool (SAPP) which will allow Mozambique to export power to Malawi. A corresponding Power Purchase Agreement, and related commercial agreements between EDM and the Malawian power utility ESCOM were signed earlier this year.

German Financial Cooperation through KfW will support EDM to install a new 400 kV substation at Matambo and to construct a 142 km 400 kV transmission line to connect Matambo substation with the Malawian part of the interconnector. As part of the German contribution, fibre-optic cables will be installed on the transmission line as well as on two existing transmission lines in an additional length of 832 km as a prerequisite for digital broadband applications. The German government is providing EUR 10 million from its "Digital Africa" initiative for this purpose.

The total costs of the Mozambican part of the Interconnector programme amount to approx. USD 100 million. The World Bank shall offer a proposed grant of USD 42 million to the Government of Mozambique for this project. In addition a proposed grant in the amount of USD 24 million contributed by Norway will be channelled through the World Bank.

Further financing in the amount of EUR 19.45 million granted by the European Union and channelled through KfW will be provided for the Malawian side of the project.

The project is of strategic importance for Mozambique as it contributes to the further diversification of energy trading. Cross-border, reliable electricity transmission and cross-border trading are in the interest of all member countries of the Southern African Power Pool. It will significantly contribute to the creation of better conditions for households and businesses. In doing so, it will promote economic development of the entire Southern African region.

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