Scatec Solar, KLP Norfund Investments and Electricidade de Mozambique (EDM) have closed debt financing and initiated construction of a 40MW solar plant located close to the city of Mocuba in the Zambézia Province.
"EDM is very pleased that the Mocuba Solar IPP project has reached financial close through a well-structured public-private partnership between EDM, Scatec Solar and Norfund, and with excellent support from IFC and EAIF as lenders, as well as the government of Norway", said EDM's chairman and CEO, Dr Mateus Magala.
The International Finance Corporation (IFC) provided project debt of $19 million on its own account together with a concessional loan from the Climate Investment Fund of the same size and a syndicated loan of $17 million from the Emerging Africa Infrastructure Fund (EAIF), managed by Investec Asset Management, which is part of the Private Infrastructure Development Group (PIDG).
In addition, EAIF is directly providing a $7 million Viability Gap Funding grant for the project raised from the Technical Assistance Fund of the PIDG.
Mocuba solar power plant
Equity partners are Scatec Solar (52.5%), KLP Norfund Investments (22.5%) and EDM (25%). Scatec Solar will deliver Engineering, Procurement and Construction services, as well as Operation and Maintenance and Asset Management services to the power plant.
The partners signed a Power Purchase Agreement (PPA) for the solar plant in October 2016. The PPA secures the sale of power from the plant over a 25-year period to the state-owned utility EDM.
The solar power plant is expected to deliver 79,000MWh per year of much needed electricity to the northern regions of Mozambique.
Nazmeera Moola, head of EAIF at Investec Asset Management, said: “Renewable energy and affordable energy is a key area of growth for the Emerging Africa Infrastructure Fund and PIDG. By supporting this project, EAIF was able to make the project bankable by providing long tenors.
“Furthermore, by facilitating a VGF grant from the Technical Assistance Fund of the PIDG, the PIDG group was able to contribute to reducing the cost of electricity for Mozambique.”