Experts call for alternative financing for power plant

 Energy experts have urged Capital Hill to start looking at alternative financing for projects such as Kam’mwamba coal-fired power plant instead of depending on foreign aid or loans.

The sentiments follow a decision by China, which was long said to be a potential funder of the 300 megawatts (MW) Kam’mwamba project, that it will no longer fund construction of coal-fired power projects overseas.

In his address to the United Nations General Assembly last Tuesday, Chinese President Xi Jinping announced that China will only support and promote green technologies.

He said: “China will step up support for other developing countries in developing green and low-carbon energy, and will not build new coal-fired power projects abroad.”

China’s announcement comes against the background of Electricity Generation Company’s (Egenco) promise to complete a feasibility study for the coal-fired power plant project in Zalewa, Neno District.

In an interview on Thursday, energy expert Grain Malunga said China’s decision must not be taken lightly, but should make Malawi think about alternative funding for the project.

He said: “We need to look at coal and hydro-power to propel industrialisation. The only source of income will be private sector, not government to government cooperation.

“We need to look at government itself on how it can fund projects that can steer industrialisation, we cannot think about loans from other governments. Let us generate money locally.”

Malunga, a former minister of Energy, said China and other developed countries cannot discourage the use of coal now when they used the same to steer their industrialisation.

He faulted African governments, including Malawi, for always banking on donor support for such critical projects.

In an update posted on its website, Egenco said upon completion of the feasibility study this month, the company will embark on seeking project financing.

The update reads in part: “The project will take about three years to complete after reaching financial closure. Tentatively, we are looking at 2024. All being equal as far as financing arrangement is concerned.

 “The project is in line with Egenco’s diversification objectives where the company seeks to improve its power generation mix from being 95 percent hydro based to 76 percent hydro based in 5 years. Once started, the project will take about three years to complete. Tentatively, it is expected to be ready by/in 2024.”

Ministry of Energy spokesperson Upila Kamoto- Lali said the feasibility study is underway and alternative sources of funding for Kam’mwamba are being looked into.

She said: “Initially, there were talks that we would secure funding from the Chinese Government. But over time, we did not move forward with the deal. So, what has been happening is that we are reviewing the feasibility study.”

The Kam’mwamba Coal-fired Power Generation project was to be implemented jointly by the Malawi Government and China Gezhouba at an estimated total cost of $667 million (about K560 billion at current exchange rate) through a loan from the Exim Bank of China.

However, the project stalled due to what the former chief executive officer of Kam’mwamba Coal-fired Power Generation Overton Mandalasi, described as lack of financial closure