Exim Bank of China to finance Malawi coal-fired power plant project 

Malawi government has disclosed that the Kam’mwamba Coal-Fired Power Plant Project is being financed by a loan from Export and Import(Exim) Bank of China to the tune of $667 million project with Lilongwe  required to source $104 million as commitment fee.

Workers at Mchenga Coal Mine in Rumphi whose product will not benefit from the power plant

The  Coal Fired Power plant  will be installed at Kamwamba site to increase the country’s total power generation currently at 351 MW supplied to its customers, according to government.

Ministry of Energy, Mining and Natural Resources Public Relations Officer (PRO), Saidi Banda said  the Ministry would roll out the project by installing the power plant to generate 300 MWs.

“We will install 300 megawatts (MW) coal-fired power plant now and in the near future expand to 1000MWs. But the expansion will be subjected to feasibility study to determine the impact it will have on the environment.

“Apart from Kamwamba site there are also possibilities of having similar power plants in strategic sites in Malawi,” he added.

Banda said the first phase of the installation of 300MW plant is estimated to be completed within a space of three years.

“Right now, it is impossible to give the exact month on the when the project starts. But there are strong indications that the projects rolls out on December 2018 since some of the paper works regarding finances are going on with Exim Bank and Ministry of Finance,” he pointed out.

Minister of Finance,  and Economic Planning and Development Goodall Gondwe confirmed that government has agreed with their counterparts in China to have major shareholding of 85 percent while China Gezhouba Group will have 15 percent.

A report on the project published last year, said lack of a feasibility study, the Power Purchase Agreement (PPA) and the creation of the company to operate the project were some of the issues that were still standing in the way for the project to commence.

A team of experts last year visited China for two weeks, negotiating with China Gezhouba Group on the project.

The finance minister said the coal-powered plant will need 3 134 metric tonnes (MT) of coal per day, and it shall be operating around 20 hours a day once commissioned.

Gondwe further said out of the $104 million (about K75.9 billion) required commitment fee, government has $12.4 million (about K9 billion) for the project, revealing that it will be paying the money in installments.

“We are not paying this amount of money at once, it will be done in installments. We are starting with $12.4 million which we have,” explained Gondwe.

Once fully operational, the plant would among other things help Malawi to diversify from using hydro power which of late has proved to be challenging due to low water levels

According to report from Ministry of Energy, the plant would use coal from Moatize in Mozambique that will be transported by rail.

Dean of Faculty of Built environment at the Malawi Polytechnic, who is also an expert on land related issues, Rodrick Chilipunde described the development as a good direction in terms of adding up power generation capacity to meet the ever growing demand from consumers.

He expressed dissatisfaction over the importation of the coal from Mozambique to run the plant describing it as costly.

“This is a good idea, but to some extent, it is not cost effective for government to be importing coal from Moatize. The plant can be installed near Kaziwiziwi in Rumphi where there are large deposits of coal to drive the mining machinery,” Chilipunde suggested.

Mining expert Grain Malunga  also said the importing coal from Mozambique, “ doesn’t make sense” as the coal industry in Malawi needs to grow.

“Everybody in the world is worried about coal power stations because there are technologies which can be introduced to take care of pollution so it all depends on government’s commitment to combat climate change. They should not leave the Chinese to pollute Malawi skies,” explained Malunga.

He said while many countries are shunning the coal power stations, there is need for government to show commitment to combat climate change by using the right technology at the plant.

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4 years ago

It will be in Malawi’s best interests to stay away from this loan that the Chinese are offering, the Chinese a) usually charge a very high rate of interest b) when there are payment difficulties, they extract unnecessary favours from the country, most of the world is slowly awakening to the Chinese colonialisation and Malawi should be very wary on terms of engagement with the Dragon

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4 years ago

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4 years ago

Now DPP is talking, osati zamagensets akupanga panozi. We need a real long term project ngati iyiyi

zikubvuta pati
zikubvuta pati
4 years ago

Are we failing to comit 104 mio. but encouraging to siphon 100 mio USD through Diphiphi SG

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