Concession agreement for Nacala LNG power plant in Mozambique finalized

Energy supplier Great Lakes (GL) Africa Energy has finalized a concession agreement with the Mozambique government to finance and operate the Nacala LNG power plant.

Mineral Resources and Energy Minister Ernesto Max Elias Tonela and GL Africa Energy head Michael Kearns inked the deal for the 250 MW power plant project to be located in Nampula province in northern Mozambique. It signals one of the country’s most significant energy infrastructure projects in the recent decade.

The agreement marks the start of a US $400M three-part phased investment. Within 16 months, a US $90M investment will see a development of 50 MW of capacity. The second and third stages will add 200 MW and will be finished in less than a year.

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Transition to renewables

GL Energy Moçambique, a special purpose entity and a subsidiary of GL Africa Energy, will construct and operate the plant once it is completed. The project will be financed 70% through loans and 30% through equity.

The acquisition is GL Africa Energy’s largest power plant investment to date, and it expands the company’s activities in the Great Lakes and Southern Africa areas to eight nations. It has a 30-year public-private partnership framework.

Electricidade de Moçambique (EDM), a Mozambican energy corporation, has the original public stake in the project and will be the primary consumer of the electricity generated. This initiative is a significant component of the Mozambique government’s Gas Monetisation Strategy, and it will help down energy costs even further. According to Kearns, the facility will change the energy picture for the whole region.

The South African Power Pool will export excess supplies from the new Nacala plant to other markets. The facility will provide power to nearly half a million people in the United States. With over 300 employees engaged during construction, the corporation thinks that this investment would help the country’s ambition to convert the region into a sustainable commercial centre.

Nacala LNG power plant project, according to GL Africa Energy, represents a watershed moment for Mozambique. Its liquefied natural gas solution will provide a virtually instantaneous fuel bridge throughout the next two decades, lowering dependency on more polluting heavy fuel oils, diesel, and coal. Liquefied natural gas is expected to play a critical role in the country’s and region’s transition to renewables, allowing for higher long-term penetration of renewables into the energy mix. This approach is part of GL Africa Energy’s goal of generating 1000 MW across Africa by 2025.