28 C
Lagos
Saturday, January 16, 2021
- Advertisement -

AFC Invests in Ncondezi Energy’s 300 MW Mozambique Power Plant

Opinion

2020: A Year Like no Other By Dakuku Peterside

The year 2020 was supposed to be a great year. It was another Leap Year – the famed Olympic Games year when...

The Time to Restructure is Now – Bola Tinubu

Being with you at this special event today, I am visited by two competing emotions. I continue to feel a profound sense...

Africa and the COVID-19 Vaccine – By Dakuku Peterside

The year 2020 will forever be synonymous with Covid-19, a pandemic that brought the world to her knees. For the first time...

Buhari is Repressing Human Rights and Getting Away With It – By Kolawole Olaniyan

President Muhammadu Buhari is failing to live up to his promises to ensure respect for human rights, obey the rule of law,...

Ncondezi Energy Limited has conditionally raised five million US dollars for a 300MW power plant project located near Tete, in northern Mozambique, by way of a conditional placing of new Ordinary Shares in the Company to Africa Finance Corporation (“AFC”). The AFC is an African-led multilateral development financial institution with significant experience of investing in African power and infrastructure projects.

In September 2014 the Company announced that it had reached a conditional commercial deal with Electricidade de Mozambique (“EDM”) on the sale of electricity from the Ncondezi Project. The agreed commercial deal includes the range for the starting electricity tariff to be paid by EDM, which will then be subject to adjustments during the 25 year operational life of the project.

The starting tariff range is based on a number of assumptions including indexation, financing costs, coal costs, operator and maintenance costs and the technical parameters and capital costs contained in the binding Power Plant EPC bids. Based on a target project capital structure of 70% debt and 30% equity the Company believes that the conditional commercial deal supports the economics of the Ncondezi Power Plant. Ncondezi has been working to satisfy the conditions precedent and agree with EDM an indicative timetable to Financial close, now targeted for Q1 2016.

In October 2014, the Company announced that it had entered into a non-binding MOU with Shanghai Electric Power Company Limited (“SEP”), which may lead to SEP becoming a controlling shareholder in the Ncondezi Power Project and a minority shareholding in the Ncondezi Mine Project. SEP is a leading subsidiary of China Power Investment Corporation (“CPI”) which has total installed capacity of 90,000 MW and is one of the largest power companies in the Peoples’ Republic of China. A deal with SEP has the potential to provide the company, and all stakeholders in the Ncondezi Project, with the opportunity to partner with a major power generation company and potentially fast track the timetable to Financial close.

SEP has undertaken a detailed due diligence process in relation to the Company that started in December 2013 and the Company continues to make good progress with SEP in relation to finalising their outstanding due diligence items. A binding agreement with SEP is now targeted for Q1 2015. In October 201 4, the Company received a number of binding bids for the engineering, procurement and construction (“EPC” ) contract for the 92 km transmission line and substations to connect the Ncondezi Project to the Mozambican Northern Grid.

Ncondezi and its technical and commercial advisors are currently evaluating the bids. In addition, the Company recently completed and submitted its transmission Environmental and Social Impact Assessment (“ESIA”) study to the Mozambican Ministry for Coordination of Environmental Action (“MICOA”) for approval. In November 2014, the Company received its land use agreement, or DUAT in Mozambique, from the Mozambican Government granting exclusive use for power plant operations. The DUAT covers an area of 9500 hectares. Ncondezi Energy owns 100% of the Ncondezi Project which is strategically located in the power generating hub of the country, the Tete Province in northern Mozambique.

The Company is developing an integrated thermal coal mine and power plant in phases of 300MW up to 1,800MW.The first 300MW phase is targeting domestic consumption in Mozambique using reinforced existing transmission capacity to meet current demand. The Company intends to use the net proceeds of the Placing and any funds raised by way of the planned Open Offer to discharge certain near-term payment obligations in respect of the on-going development of the Ncondezi Project and to ensure that the Company is adequately funded into Q3 next year whilst it works to complete the strategic partner process, as well as to cover general working capital requirements and select development work streams.

Commenting on the Placing, Paul Venter, Chief Executive Officer of Ncondezi said: “We are delighted that the Africa Finance Corporation has become a shareholder in Ncondezi. AFC have significant expertise of investing in African Power and Infrastructure Projects and we look forward to working with them to continue the development of the Ncondezi Project.”
Andrew Alli, President & Chief Executive Officer AFC commenting on the groundbreaking partnership said “ AFC is delighted to provide not only access to finance, deal structuring and sector technical expertise, but also advisory services, project development capacity and funding to bridge the power infrastructure investment and access deficit, a critical pillar for economic growth across Africa”.

The Africa Finance Corporation (AFC) is an African-led multilateral development financial institution, established in 2007, with a mission to improve African economies by proactively developing and financing infrastructure, industrial and financial assets.

The AFC is involved as an investor, developer and financier of various infrastructure projects, and is gaining recognition as the benchmark institution for financing the development of infrastructure projects in Africa. The AFC’s current authorized share capital is US$2.0 billion with shareholders’ funds of US$1.28 billion and a 2014 funding program of over US$1 billion. AFC is the second highest investment grade-rated multilateral financial institution on the African continent, with an A3 (long term) /P2 (short term) foreign currency debt rating by Moody’s Investors Service.

- Advertisement -
- Advertisement -

Business Profiles

Ngozi Edozien

Ngozi Edozien is the founder and Managing Director of Invivo Partners Limited. She has over 20 years’ experience in finance/private equity, general...

Sanyade Okoli

Sanyade Okoli is Chief Executive Officer at Alpha African Advisory. She has over 21 years of financial advisory, private equity, corporate, commercial...

Samuel Nwanze

Samuel Nwanze is a director of Transcorp Power. He holds an MSc. degree in Finance and Management from Cranfield University in the...

Olukemi Adeniji

Ms Adeniji has a law degree and a Masters in International Law and Diplomacy (M.I.L.D) from the University of Lagos. She has...

Chikezie Nwosu

Chikezie Nwosu is an experienced senior executive with over 29 years local and international experience in the oil & gas industry vis-a-viz...