Financial close has been reached for a $200 million gas-fired power station project in Mozambique, the south-east African nation.
The project is being developed by local company, Gigawatt, which has signed a long-term power purchase agreement (PPA) with the Mozambique state power company, Electricidade de Mocambique, for all the power generated by the project.
Equity for the deal has been provided by Mozambique clean energy developer Gigajoule Power, South Africa’s Old Mutual Life Assurance company and South African developer WBHO Construction.
With financial close completed, construction of the 100-megawatt (MW) power station will now commence, with the intention that it will come on-stream in the fourth quarter of 2015. The station is located in the Gigawatt Power Park in the Mozambique/South Africa border town of Ressano Garcia.
The project “should be a catalyst to the much needed growth in the energy sector in Mozambique and the southern African region,” according to Coenraad Krige, a managing director at Eaglestone Capital Advisory, the sub-Saharan Africa-focused investment bank which acted as financial adviser to Gigawatt on the deal.
The project is seen as a significant step forward in terms of supplying cheap clean energy to homes and industry in Mozambique using the country’s gas reserves. According to World Bank estimates, only 20 percent of the population of Mozambique has access to electricity compared with 85 percent in neighbouring South Africa.