The planned power stations, mainly to be financed by private investors, will, if fully developed have an installed capacity of 6-7000 MW or more that 3 times the existing capacity in the country. Approximately 50 % of this will be hydropower.
The transmission system, excluding the connection to Malawi, is estimated to cost USD 2.4 billion if fully developed to a capacity of 6000 MW. A first phase amounting to USD 1.7 bill. with a capacity of around 3100 MW seems however to be a more realistic alternative, at least in terms of meeting the actual needs of the power generators on a short to medium term. The public utility in Mozambique, EDM, is assumed to own 51 % of the company planned to spearhead the development and operation of the system. External partners, e.g. the generation developers and the public utility of South Africa, Eskom, have been invited to take an equity position in the company. On the short to medium term, most of the power generated is anticipated to be exported to South Africa.
Within a program for capacity building on CDM in Mozambique which the Embassy initiates these days, there will be included a case to verify and prepare the required documentations to seek at an approval for the benefits in terms of reduction in emissions of CO2 by substituting coal based power in South Africa with hydropower from Mozambique. On the short to medium term, most of the power generated is anticipated to be exported to South Africa.
Recently completed studies have verified that there are substantial benefits offered through a regional development of the power sector with cross-border power exchange, both environmentally and economically. In a ranking of the 10 most important regional power projects done in July 2009, the planned projects in Mozambique were on this basis all included as least cost and environmentally friendly alternatives to meet the existing regional power deficit. This has been a key justification for the Norwegian support to the Fund.
The projects will also strengthen the basis for regional power trading and the implementation of a competitive power market in the region. At the same time the projects will support the ongoing economical integration process within SADC.