The piece “Standard Bank partners Intra Energy in 120MW power project” featured below was initially published in Malawi’s Mining & Trade Review Issue Number 34 that is circulating this February 2016.
The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.
Standard Bank partners Intra Energy in 120MW power project
By Evetar Chinsolo
Africa’s financial power house, Standard Bank, has entered into mandate with Intra Energy Corporation (IEC) with respect to sourcing joint venture partners for the Pamodzi coal fired power generation project in Salima which seeks to utilize coal from its Nkhachira coal mine in the northern region.
Chairperson of IEC Graeme Robertson says in the company’s 2015 annual report that his company which is pursuing the Pamodzi Project through its local subsidiary, Malcoal Mining, struck the deal with Standard Bank South Africa in May 2015.
The mandate is structured on a success only basis. Two potential partners have been identified and they are currently undertaking due diligence,
says Robertson in the report.
He reports that in December 2014, power purchase agreement (PPA) term sheet negotiations with the Electricity Supply Corporation of Malawi (ESCOM) were concluded and the term sheet was initialled.
Approval for execution has been given by IEC’s board, and the Attorney General’s office in Malawi has also approved the term sheet. It is currently being circulated amongst ESCOM’s board for final execution approval.
The delay in execution stems from ESCOM having a new board constituted in March 2015.
Meanwhile, Intra Energy has expressed concern over market challenges in continues to encounter in Malawi as regards sales from the Nkhachira Coal Mine.
Robertson says due to the market challenges Malcoal continues to grow slowly while pushing into supplying more of the Malawi industrial market.
There is limited scope for regional exports given logistical challenges and existing coal mines in Mozambique, Zambia,and Zimbabwe,
As at 30 June 2015, Malcoal had 3,900 tonnes of coal held in stockpiles due to the market hiccups.
Robertson also reports that a haul road was planned for construction during the previous financial year but it has been delayed due to the wet season and then the withdrawal of the nominated contractor, hence it is now planned for 2016.
Laboratory equipment is currently on order which will further assist with timely quality assurance,
Malawi is currently experiencing a serious power crisis which is having a knock on effect on mining and other economic sectors.
The Government is, therefore, promoting investment by independent power producers (IPPs) such as Malcoal to start producing power that will be channelled into the national power grid.
Escom currently sources up to 98% of its power from hydro power stations cascaded on the Shire River and production is always affected by environmental problems including siltation, which damages the company’s machines.
It is, therefore, expected that Malawi’s adoption of alternative energy sources including coal will ensure security of power a part from beefing up generation capacity for Escom, which now stands at 351MW against the soaring demand pegged at 400MW.