Ncondezi Energy announced that it has received a letter of support from the Ministry of Mineral Resources and Energy (MIREME) for its integrated 300MW power and coal mine project and also signed a Memorandum of Understanding (MoU) with the Mozambican state power utility Electricity de Mozambique (EDM).
According to a company statement, the letter of support and MoU set out a clear pathway for development of the project, including finalisation of the project timetable, and confirm that project development is to be managed through a liaison committee, chaired by MIREME.
The support documents also confirm that coal generation is part of Mozambique’s energy generation mix and that the project is an advanced stage project, which is in line with the national Energy Policy. Read more: Mozambique approves Integrated Master Plan for electricity infrastructure
In particular, the MoU sets out certain prerequisite conditions to enter formal tariff negotiations including the finalisation of the joint development agreement with the company’s potential strategic partners and the receipt of binding engineering, procurement, and construction and operations and maintenance contracts.
EDM has also identified certain preconditions to the negotiations including that the local exchange rate outlook remains stable and for the continuation of, or improvement in, energy demand outlook and regional tariff pricing outlook, each of which can be waived at EDM’s election.
Updated tariff proposal
The support documents follow the introduction of the company’s potential strategic partners to MIREME and EDM and subsequent submission of an updated tariff proposal in July 2018, which included a more than 10% reduction in the previously agreed tariff rate.
Non-executive chairman, Michael Haworth, commented: “Receipt of the support documents from MIREME and EDM are welcomed by the company, as they provide formal support for the continued development of the project as well as confirmation of the process and key development milestones required to enter into formal tariff negotiations and finalise the project development timetable.
"With delivery of the support documents, the company’s attention moves to finalising and implementing a revised timetable with its potential strategic partners to deliver key development milestones, particularly the delivery of the joint development agreement which the company believes it is adequately capitalised to achieve."
“The Mozambican government recently approved the Integrated Master Plan for Electricity Infrastructures, which includes the sourcing of 1,350MW of coal fired energy between 2018-2043. As one of the most advanced power development projects in Mozambique, the company is well positioned to supply this power,” Haworth concluded.