Mozambique to Invest $2.8 Billion to Increase Hydropower Capacity

Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--A start is being made on a project to increase the power generation capacity of Mozambique's Cahora Bassa hydropower dam, which has the potential to produce up to 12,000 megawatts (MW) of electrical power.

The project in Tete province to increase the power output capacity from the current 2,075 MW to 3,220 MW over the next five years is estimated to need a $1 billion investment, which will come from the Cahora Bassa company and from independent investors.

The current power generation takes place at the southern end of the Cahora Bassa gorge and dam. The new 1,245-MW project is in the north-central area of the dam. January 2012 will see the completion of geological and hydrological project studies, and construction is scheduled to begin in 2013.

The CEO of Electricidade de Moçambique (EDM), Mozambique's national power company, said that a plan is being developed to raise $1.8 billion to finance a 1,500-kilometer power transmission line to link Cahora Bassa with the country's capital Maputo. Interest in this project has come from a range of financial institutions, including the World Bank, European and African development banks, and individual countries.

The government is targeting to have the transmission line in operation by 2017 to carry the increased output from the hydropower scheme as it comes online. Currently, Maputo receives power from Cahora Bassa through a line that first goes through South Africa and then doubles back to the capital.

Mozambique's power demand is expected to grow at a rapid rate from the current 1,500 MW. Only 20% of the population currently has access to grid power. Mining and downstream industries are also set grow at an accelerated rate through 2020.

Plans for Portugal to sell its 15% stake in Cahora Bassa are temporarily on hold, as the two governments have yet to agree on the price for the stake. In 2010, a plan was formulated for Portugal to sell 50% of its stake to the Portuguese grid operator Redes Energéticas Nacionais, SGPS, S.A. (REN) (Lisbon), with Mozambique's utility CEZA taking the 7.5% balance.

When Mozambique gained independence in 1975, Portugal, the ex-colonial power, retained an 82% stake in the dam, but sold a 67% stake to Mozambique in 2006 for $950 million.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.