Mpatamanga Hydropower Project (WB-P165704)

Countries
  • Malawi
Where the impacts of the investment may be experienced.
Financial Institutions
  • World Bank (WB)
International, regional and national development finance institutions. Many of these banks have a public interest mission, such as poverty reduction.
Project Status
Proposed
Bank Risk Rating
A
Risk rating varies among banks and may refer only to the particular investment and not to the risk for the project as a whole. Projects marked 'U' have an 'Unknown' risk rating at the time of disclosure.
Voting Date
Nov 19, 2020
The estimate day the bank will vote on a proposed investment. The decision dates may change, so review updated project documents or contact the EWS team.
Borrower
Government of Malawi
The holder of the loan, grant, or other investment.
Sectors
  • Energy
  • Hydropower
  • Technical Cooperation
The service or industry focus of the investment. A project can have several sectors.
Investment Type(s)
Loan
The categories of the bank investment: loan, grant, etc.
Investment Amount (USD)
$ 350.00 million
Value listed on project documents at time of disclosure. If necessary, converted to USD$. Please review updated project documents for more information.
Project Cost (USD)
$ 1.07 million
Value listed on project documents at time of disclosure. If necessary, converted to USD$. Please see updated project documentation for more information.
Primary Source

Original disclosure @ WB website

Updated in EWS May 8, 2020


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Project Description

According to bank documents, the project objective is to increase hydropower generation capacity through a public private partnership in Malawi.

The project is a hydroelectric power project (350 MW) located around 40 km west of Blantyre. The project is located on the Shire River, between the existing Tedzani and Kapichira hydropower plants. 

In addition, the Government and IFC entered into a cooperation agreement (CA) - an interim, simpler arrangement between GOM and IFC, enabling IFC to start in the name of the Government on certain early-stage development activities before the JDA was concluded in April 2019. The overall project investment amount, financed by the Project Company, and including preparatory work, development costs, interest during construction, and contingencies is currently estimated to US$ 1.07 billion. IDA resources of US$ 350 million shall be used to fund the following components:

  1. Transmission Line (US$ 25 million): The project is expected to include a 64 km 400 kV, double circuit transmission line that will connect the Mpatamanga switchyard to the Phombeya Substation. Loading of the 400-kV line from Mpatamanga to Phombeya will be 169.2 MW for each circuit at 16.4 percent for Ckt 1 and 16.8 percent for Ckt 2. Losses for the transmission will be 0.3 MW for each circuit.

  2. Hydropower Plant (US$ 265 million): IDA resources shall be used to contribute to the project’s capital costs, the details of which, including the form of onlending, shall be determined during project preparation. Capital costs for equipment, civil works, transmission lines, mobilization, and contingency are provided as an early estimate in the technical audit of the feasibility study. It is expected that EGENCO will own equity - funded by IDA proceeds allocated by the Government - in the project company on behalf of the Government. The Government would like to preserve its ability to be represented on the Board of the company through EGENCO, and vote on important decisions. IDA resources are expected be mobilized to cover the proposed EGENCO equity ownership in the project company.

  3. Technical Assistance (US$ 10 million): EGENCO is the proposed Government entity responsible for preparing the project in partnership with IFC, and the Concessionaire. As such, a fully staffed PIU shall be formed at EGENCO to manage project preparation, the members of which will require capacity building in the supervision of complex hydropower projects. In addition, capacity building support in hydropower plant operations, and in engaging with the private sector including risk allocation, and sharing, contractual arrangements, duties and responsibilities of the public sector, and proposed financing obligations, shall be included in a comprehensive TA program.

  4. Component 4: Guarantee(s) (US$ 200 million cover, US$50 million IDA allocation): In order to attract private capital required for the project, and the perceived credit risk of Malawi, the bankability of the project will likely require credit enhancement which can be provided through IDA Guarantee(s). IDA resources can be mobilized in form of Loan Guarantee(s) (US$ 110 million) which could provide support to local or international debt. An IDA Payment Guarantee (US$ 90 million), that would backstop a certain number of months of payments under the Power Purchase Agreements between ESCOM and the project company. The nature of the guarantee and coverage to be provided shall be discussed with the GoM, the private sponsors, IFC, lenders and with the proposed GoM transaction advisers during preparation.
Investment Description
  • World Bank (WB)
Contact Information

World Bank:
Dhruva Sahai
Senior Financial Specialist

Borrower:
Ministry of Finance, Economic Planning and Development
Mr. Cliff Chiunda
Secretary to the Treasury
cliffchiunda.yahoo.co.uk

Implementing Agencies:
Ministry of Natural Resources Energy & Mining
Mr. Patrick Matanda
Permanent Secretary
matandapat@yahoo.com

Electricity Generation Company (Malawi) Ltd.
Mr. William Liabunya
Chief Executive Officer
wliabunya@egenco.mw 

ACCOUNTABILITY MECHANISM OF WORLD BANK

The World Bank Inspection Panel is the independent complaint mechanism and fact-finding body for people who believe they are likely to be, or have been, adversely affected by a World Bank-financed project. If you submit a complaint to the Inspection Panel, they may investigate to assess whether the World Bank is following its own policies and procedures for preventing harm to people or the environment. You can contact the Inspection Panel or submit a complaint by emailing ipanel@worldbank.org. You can learn more about the Inspection Panel and how to file a complaint at: http://ewebapps.worldbank.org/apps/ip/Pages/Home.aspx.