The piece “Aussie firm pens deal with Escom for 120MW power plant” featured below was initially published in Malawi’s Mining & Trade Review Issue Number 37 that is circulating this May 2016.
The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.
Aussie firm pens deal with Escom for 120MW power plant
By Marcel Chimwala
ASX-listed Intra Energy Corporation, which is developing the 120MW Pamodzi Coal-fired Power Plant in Malawi’s lakeshore district of Salima, has announced the signing of a term sheet relating to the power purchase agreement with the Electricity Supply Corporation of Malawi (Escom).
CEO for Intra Energy Corporation, Tarn Brereton, says in a press statement that the company has signed the term sheet agreement with the state-owned power utility following lengthy discussions with the Malawi Government.
Brereton says the company is intending to produce electricity at the plant using coal sourced from its Tancoal Mine in Tanzania and not Malawi’s Malcoal mine as it was previously planned as the company is currently pondering over the sale of Malcoal mine and the rest of its Malawi subsidiaries.
Intra Energy Corporation continues discussions in relation to the sale of its Malawian subsidiaries, Malcoal Mining Limited, Pamodzi Power Limited and Intra Energy Trading Limited with a view to the long-term supply of coal to the 120 MW Pamodzi Power Station from its Tancoal mine,
Intra Energy earlier announced that it had suspended mining operations at its Malcoal Mine in the northern region of the country due to low sales as most of Malawi’s coal users opt to import coal from Mozambique.
Sales in Malawi remained low for the quarter as imports increased from Mozambique coal producers,
Brereton said in the company’s activities report for the quarter ending December 2015.
Malawi is in the process of opening up its power market currently dominated by Escom to independent power producers (IPPs) in order to solve the current power crisis which has emanated from low generation capacity and insecurity of power due to overreliance on hydro-power plants located on the Shire River.
In total, the Malawi Government has signed term sheet agreements with 27 IPPs which will generate power from coal, liquid fuels, biomass, solar, wind and hydro-sources.
The firms include a French company, CDEN, which has planned to generate 100MW using solar and large-scale batteries at a base in the northern district of Mzimba.
CDEN has similar projects in Europe and other African countries such as Rwanda, Chad, Tanzania, Uganda, Guinea and Democratic of Congo.
CEO for CDEN, Hugues Antoine-Guineseau, says the company has set aside US$200-million to roll out the project starting with feasibility studies.
The Malawi Government also awarded another potential project, the 41MW Bongozi hydropower project on Bua River to an IPP, Su-KAM Energy Limited.
Su-Kam signed a memorandum of understanding with the government on June 24, 2011 through a locally registered special purpose vehicle, Hydro Electric Power Limited (HE Power Ltd).
The investor conducted both feasibility studies and environmental and social impact assessment (ESIA) which were concluded in 2013.
The investor is now looking for financing for the project and it is expected that once financing is finalized, HE Power will develop the 41 MW- Bongozi Hydropower plant and connect it to the ESCOM grid for supply of power in the country,
says Spokesperson for Energy Affairs at Malawi’s Ministry of Natural Resources, Energy and Mining, Joseph Kalowekamo.
Currently, low water levels on the Shire River due to insufficient rains experienced over the years has resulted in insufficient power generation forcing Escom to embark on prolonged load shedding programmes, which are affecting operations of the country’s industries which mostly rely on power from the national grid.
Malawi generates 351MW of electricity against a growing demand of 400MW and besides climate change problems such as the low water levels, heavy siltation in the river, which produces up to 98% of electricity, also affects the operations of the machines creating insecurity of power which has prompted the country to explore alternative power sources.