WASHINGTON, June 20, 2019— The Board of Executive Directors of the World Bank Group today approved a total amount of $420 million of International Development Association (IDA)* grants and guarantees to strengthen Mozambique’s transmission capacity for domestic and regional markets and increase electricity generation capacity through private sector investment. The project will also benefit from a co-financing of $24 million grant from a Norwegian Trust Fund.
Developed as an integrated operation including both public and private investments, the Temane Regional Electricity Project (TREP) will support the construction of a 563 km high-voltage transmission line between Maputo and Vilanculos/Temane and a private sector financing of a 400-MW combined cycle gas-to-power generation plant at Temane. Together, they would strengthen generation and transmission of power within Mozambique and in southern Africa. The project will enable private investment of around $750 million for generation.
“In addition to enhancing the transmission and generation capacities, the TREP will finance technical studies in support of regional power integration and renewable technologies in power system planning and operation. It will also support studies on power sector investment plans, including Mozambique’s role in regional trading”, indicates Zayra Romo, Senior Energy Specialist and Task Team Leader of the project.
The TREP is part of the transmission backbone of Mozambique, designed to integrate its disjointed northern, central and southern power systems and strengthen regional connectivity to the Southern African Power Pool (SAPP). The project is integral to the efforts of the SAPP to increase the generation capacity and expand the regional transmission network, create conditions to provide access to millions of people in the region living without electricity, and reduce the carbon intensity of the Southern Africa power systems. “It is also fundamental to developing the Mozambican domestic power system, expanding energy access, and ensuring the secure, affordable, and sustainable power supply that is one of the key drivers of Mozambique’s economic and social development”, said Mark R. Lundell, the World Bank Country Director for Mozambique.
“The Temane project is key to increasing opportunities for power trade among SAPP countries. Despite the abundance of energy resources in the subregion, lack of cross-border interconnections remains a major constraint. The full integration of SAPP countries’ power systems and more power trade could bring savings of $42 billion in investment and operating costs till 2040. The Bank is committed to helping southern Africa realize these potential savings”, said Deborah Wetzel, the World Bank Director for Regional Integration for Africa, the Middle East and Northern Africa.
The TREP complements two other IDA operations under implementation in Mozambique (amounting to $230 million) aimed at improving reliability and efficiency of the existing power system, advancing corporate reforms at the national electricity company (Electricidade de Moçambique, EDM), and expanding access.