China Eximbank pledges to finance the 300MW Kam’mwamba Coal-Fired Power Plant Project and TBEA Power Lines

On June 14, 2013, the Government of Malawi signed two commercial contracts worth $667,233,000: a commercial contract with TBEA to construct transmission lines and substations in Malawi (see Project ID#57494) and a commercial contract with China Gezhouba Group Company (CGGC) for the 300 MW Kam’mwamba Coal-Fired Power Project (see Project ID#30334). Then, on December 2015, the Chinese Government and the Government of Malawi signed a Memorandum of Understanding (MOU) regarding the 300MW Kam’mwamba Coal-Fired Power Plant Project. Under the terms of the agreement, CGGC and TBEA were to design and build the project, including the construction of: a 300MW coal-fired power plant in Neno (located in southern Malawi), a substation, a 10km railway line for coal transport and laying 15km of 132kv transmission lines. China Eximbank was expected to provide $667,232,814 for debt financing. The power plant was expected to use about 400,000 tons of coal annually from Moatize in Mozambique. CGGC was expected to hold a 15%ownership stake in the project company (special purpose vehicle) responsible for the coal power plant, while the Government of Malawi was expected to hold a 85% ownership stake (see Project ID#30334). However, the project, which was originally expected to commenced in 2016, faced a variety of delays due to lack of a feasibility study, a Power Purchase Agreement (PPA) and a project company (special purpose vehicle) to operate the project. The Government of Malawi eventually set up a special purpose vehicle known as Kam’mwamba Power Generation Company Limited. However, China Eximbank also asked that the project be broken into two phases (a 200MW phase and a 100MW phase) and the loan be down scaled to approximately $500 million. Then, in October 2019, the Government of Malawi announced that it would abandon its partnership with CGGC and shift responsibility for the project to Energy Generation Company (Egenco). It also announced that it would no longer pursue a loan agreement with China Eximbank but instead finance the project itself. However, in early 2019 and 2020, news reports suggested the project might still move forward with support from China Eximbank. Then, in its ‘Annual Economic Report 2021, Government of Malawi announced that it “planned to implement the project through a loan from the EXIM Bank of China. However, by 2019, the arrangement had not materialized despite working on it for over 3 years. [The] Government therefore decided to engage Electricity Generation Company (EGENCO) to proceed with the project. As such, EGENCO has had to restart the whole process hence it has now engaged a consultant to carry out Feasibility Studies and Environmental and Social Impact Assessment (ESIA) studies which will be completed by March 2021. Future plans and main project timeline will be determined upon completion of these studies.’

Additional details

1. The Chinese project title is 卡姆万巴燃煤电站项目. 2. According to Malawi’s Energy Minister Ibrahim Matola, who signed the commercial contract with TBEA on behalf of the Malawi Government, after a survey of the existing transmission network, TBEA initially proposed three possible upgrades (descending based on priority and estimated cost): the Phombeya-Salima-Nkhotakota-Chatoloma, 220 kV transmission project ($222 million); the Nkhota-Kota-Chintheche-Luwinga-Bwengu, 220kV transmission project ($139.9 million); and the Lilongwe- Mchinji-Chipata 330 kV transmission line project ($85 million). TBEA later decided to prioritize the construction of the Phombeya-Makanjira-Nkhotakota-Chatoloma 220 KV Power Line at a cost of $189,298,285 to the Malawian Government.

Number of official sources

8

Number of total sources

33