Mozambique Energy Industry: CESUL Project Feasibility studies to be concluded soon

The feasibility studies for the Project for Regional Development of Energy Transport between the Centre and the South (CESUL) in Mozambique are almost complete and are due for submission in the first few months of 2015, said a source from the Norwegian Embassy in Maputo, quoted by Macauhub.

Through its diplomatic representation, Norway has funded the implementation of feasibility studies, which are conducted by Norconsult, including the creation of a power transmission network between central and southern Mozambique, along with a connection between central Mozambique and Malawi.

At a cost of about US$76.6 million (500 million Norwegian Kroner), the consultancy also has the support of the World Bank, and the results are expected in the first months of next year, according to the Norwegian embassy advisor, Camilla Helgo.

The shareholder structure of the CESUL project, also known as the “backbone” of Mozambique, includes China State Grid Corporation (CSGC), with a majority stake of 46 percent, South African electricity company Eskom, with 25 percent, Mozambican state power company EdM with 15 percent and the Portugal’s REN, with 14 percent, which is itself part-owned by CSGC (25 percent).

Presented about four years ago, the “backbone” is one of the biggest energy projects planned for Mozambique and is expected to cost over US$2 billion.

Although feasibility studies were previously carried out for the project, changes in the shareholder structure led to some changes in the route originally planned, keeping, however, plans to build a dual transmission line: one with a voltage of 400 kilovolts and the other with voltage of 800 kilovolts.

Given the delays in the construction of Mphanda Nkuwa, located 61 kilometres downstream from the Cahora Bassa (HCB) facility on the Zambezi River, and which was due to begin in 2012, development of the Centre/South line is not expected in the short term.

The dam, whose shareholders are Mozambique’s Insitec and Brazil’s Camargo Corrêa, both with 40 percent, as well as state power company EdM (20 percent), has potential to generate 1,500 megawatts (initial phase) and is classified as essential for the CESUL project, which if it goes ahead now would only be fed by the 2,000 megawatts of power produced by HCB, which is insufficient for the facility, as the Mozambican authorities have already noted.

However, and at the request of petrochemical company Sasol, feasibility studies have already been initiated by Norconsult for development of a power transmission network between Inhambane and Maputo, a project that is based on power production from natural gas extracted by the South African company in the regions of Pande and Temane. This project is intended to replicate the success of the Ressano Garcia-Maputo (south) connection, which is also dependent on thermal power plants.

Costing an estimated US$500 million, the project so far has Sasol and EdM interested in its development and is not expected to launch before 2016.

In addition to funding the feasibility studies of the “backbone” project, Norway is also providing technical and financial assistance to four projects focusing on power transmission and distribution in the province of Cabo Delgado (north), worth US$50.4 million (342 million Norwegian Kroner), which is due to be completed soon, according to Camilla Helgo.

In similar projects, Norway, which has supported Mozambique since the mid-1970s, estimates it has provided average annual funding to the country of around US$8.8 million (60 million Norwegian Kroner), between 1980 and 2006, which resulted in an increased power supply of 250 gigawatts per year.

Norway has also been involved with the Mozambican authorities in connection with oil and gas sector programmes, an example of which is a recent legal assistance and capacity development agreement based on a donation of US$7.3 million (50 million Norwegian Kroner), planned for the 2014-2018 period. (macauhub/MZ)