World Bank Approves $57 Million grant for Mozambique and Malawi Regional Interconnector Project.

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World Bank Approves $57 Million grant for Mozambique and Malawi Regional Interconnector Project

The Board of Executive Directors of the World Bank Group approved a total of $57 million equivalent for the Mozambique-Malawi Regional Interconnector Project.

The project will interconnect the Mozambique and Malawi transmission systems to enable both countries to engage in bilateral and regional power trade in the Southern African Power Pool (SAPP).

According to information supplied by malawi government of this amount, Mozambique will receive $42 million equivalent as an International Development Association (IDA) grant.

Malawi will receive a $15 million equivalent IDA credit. In addition, Mozambique is expected to receive a grant of $24 million from a Government of Norway trust fund administered by the World Bank, along with a Euros 20 million grant from the Government of Germany.

Malawi shall receive Euros 20 million through an EU grant.

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.

Its main undertakings include the construction of a 218 km, 400 kV high voltage alternating current transmission line, 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.
This will create conditions to expand access to millions of people in the region living without electricity, and help decarbonize the Southern African power systems, which are currently dominated by coal generation,” said Deborah Wetzel, the World Bank Director for Regional Integration for Africa, the Middle East and Northern Africa.

The SAPP is the first and the most advanced power pool in the continent providing an alternative to domestic electricity generation to improve energy security.

This project will fund Malawi’s first interconnection to the SAPP, which has been a priority since the early 2000s with several attempts to translate to reality.

“This project responds to Mozambique’s sectoral priorities to emerge as a regional energy hub, by exporting power to Malawi. It also increases the country’s potential for exporting electricity through the SAPP to many other countries in future,” noted Mark Lundell, World Bank Country Director for Mozambique, Madagascar, Mauritius, Seychelles, and Comoros.

“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 also 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), established in 1960, 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.

IDA is one of the largest sources of assistance for the world’s 75 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change to the 1.5 billion people who live in IDA countries. Since 1960, IDA has supported development work in 113 countries. Annual commitments have averaged about $18 billion over the last three years, with about 54 percent going to Africa.

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