Malawi has scaled down the 300 megawatts (MW) Kam’mwamba Coal-Fired electricity generation project in Neno following the financiers’ decision to reduce the loan amount.
Beijing, the financier of the project, has asked Lilongwe to reduce the loan amount for the implementation of the coal fired plant project from about $700 million (about K513 100) to around $500 million (about K366 500).
Minister of Finance, Economic Planning and Development Goodall Gondwe said in an interview on Thursday that the first phase of the project was expected to start in November this year, but has since been shifted to the first quarter of 2019 due to the changes.
He said the change have come about because the Chinese felt the project was too big and had to be phased.
“We have been asked by the Chinese to phase out the 300MW to 200MW and 100MW. We have now reduced the amount to be borrowed from $700 million which was huge to inside $500 million and that has been agreed upon,” said Gondwe.
The minister said both Capital Hill and Beijing are now working on the technicalities of the project.
“We are taking the documents back to the Chinese next year. We have postponed the matter. We were hoping to start production this month, but it will be done next year,” he explained.
The initial plan for the 1 000MW Kam’mwamba thermal plant involved the construction of a 300MW plant comprising six units of 50MW capacity each in the first phase of the project with funds borrowed from China’s Export and Import Bank while the second phase was to build a 700MW plant.
The project, which was expected to start in 2016, delayed due to lack of a feasibility study, Power Purchase Agreement (PPA) and the creation of a company to operate the project.
Malawi Government has since formed Kam’mwamba Power Generation Company Limited (KPGC) while China Gezhouba Group Corporation (CGGC) will construct the coal-fired power plant at Zalewa in Neno.
Malawi Government signed a memorandum of understanding with Gezhbouba Group of China Energy Engineering Corporation in 2013 for the construction of the power plant of up to 1000MW.
The plant is expected to use about 400 000 tonnes of coal annually from Moatize in Mozambique.