A planned coal-fired power plant in Moatize, province of Tete, Mozambique is seeking more than half a billion dollars in financing from multilateral lenders and export credit agencies. Saudi Arabia-based ACWA Power is leading the development of the 300 MW project at Vale’s coal mine in Moatize.
Vale will use 80% of the power produced in its mining operations, while the remaining 20%, or 60 MW, will be sold to Mozambique electricity utility EDM. The project is 56.5% owned by ACWA, with smaller stakes held by Vale and Japanese firm Mitsui. EDM has a 5% stake in the project, and Whatana Investment Group, an investment firm led by Graça Machel (Nelson Mandela’s widow) has 8%.
Paddy Padmanathan, CEO of ACWA Power said that financing the plant is “turning out to be quite a challenge”, having gone through “a few different configurations on the financing structure”. Total investment in the project will be “just short of $1 billion”, Padmanathan said. Some of that will come from the partners’ equity investments, and there is a portion of uncovered debt already committed – but Padmanathan said he expects the majority of the finance to come from debt provided or guaranteed by multilateral lenders and development finance institutions.
ACWA has engaged Korean engineering firm GS to build the plant, meaning the Korean export promotion bank KEXIM is likely to be one of the project’s financiers. Other candidates include the African Development Bank, which recently committed $300 million to Vale’s Mozambique coal export project, the Nacala Logistics Corridor.
The Moatize plant is just one of a number of coal-fired power projects planned by coal miners in Tete. Jindal is also planning 180 MW of generation at its mine, while ICVL, a consortium of Indian state-owned coal miners and steel producers, is currently re-tendering for a firm to build a 200 MW plant in its mine.