The Government of Malawi (GOM) with support from the World Bank conducted a Feasibility Study and detailed designing for Mpatamanga Hydropower Plant which is located at the Mpatamanga Gorge on Shire River, between the existing Tedzani and Kapichira Hydropower plants. After realising that it was a good and economically viable project, Government then asked World Bank for further assistance to develop the project. The World Bank then sold the project to its investment arm, International Finance Cooperation (IFC) to invest in the project. IFC reviewed the feasibility study and proposed to be Co-Developers of the project together with Government, hence signed a Cooperation Agreement (CA) which stipulated the development and signing of a Joint Development Agreement (JDA). The JDA spells out a number of things; roles of IFC and Government, project structure in terms of financing and organisation, the various commercial principles upon which the project will be implemented.

The power plant was originally designed as a daily storage plant to be operated as a peaking plant with a generation capacity of 309 megawatts (MW). At this capacity the water release from the plant is at 550m3/s. It was estimated that this release would result into lump up of waters, some kilometres downstream of the plant up to 4m high above the lowest and normal water levels further down the Shire, around Chikwawa and up to Elephant Marsh, this would cause the waters to swell up and down two to three times in a day. As a result, this would disturb the animals living downstream and the livelihood of the people who depend on farming along the Shire River.  In order to mitigate these adverse environmental and social impacts, further studies were conducted to construct a regulating dam to hold the excess water from the main dam during peak hours. A feasibility study was conducted on the regulating dam’s potential for power generation and it was discovered that 41MW of base load can be generated from the dam. Therefore, the Mpatamanga Hydropower Plant will generate 350 MW (309MW peak load from the main dam and 41MW base load from the regulating dam).

The Project is structured to have Build-Own-Operate-Transfer (BOOT) model with a 30 year concession which entails that the Project Company will construct the Project, own it, and operate it for a set period of time, earning the revenues from the Project in this period, at the end of which ownership is transferred back to GoM.

The investment cost of the project is estimated at USD970million and the project will be implemented using a Public Private Partnership (PPP) approach with the construction expected to commence after financial close in June 2021 for a period of 4.5 to 5 years. The financing will be based on a 30% debt to 70% equity ratio.  As developers of the project, GOM and IFC will also provide equity to the project and all parties will have to meet their costs based on their equity contribution. It is envisaged that government equity will be funded using a loan from the World Bank’s International Development Association (IDA) which will be repaid using repayments received from project. GOM and IFC will then procure a Strategic Sponsor through a tendering process to form the Project Company. It is expected that the Government and IFC will each take 30% Shareholding while the Strategic Sponsor will have 40% shareholding in the Project Company. The Government will participate in the shareholding agreement through the state-owned generation company, EGENCO. Procurement of the Strategic Sponsor is expected to be completed by June 2020. Thereafter parties to the project, GOM, IFC and the Strategic Sponsor, will have to solicit funds for the project. The time frame for mobilisation of funds is up to June 2021. This will bring the financial close for the project to an end.

 

Specifications of the project:

  • Main Dam is expected to be a 50m high Concrete Face Rockfill Dam (CFRD) with an adjacent gated spillway at the right abutment which will create a daily storage 22-km-long reservoir that will flood an area of 19 km2 and have a total volume of 261 Mm3;
  • Two diversion tunnels;
  • Two low pressure power tunnels with surge shafts and underground penstocks, located at the left abutment;
  • Surface powerhouse, housing 6 vertical Francis turbines located 800 m downstream from dam. It will provide flexible generation between an expected minimum baseload of 42.5 MW and its 309 MW installed capacity. The powerhouse can be used at peak capacity for up to 9 hours per day to meet peak demand;
  • Regulating Dam (RD) with a 41 MW power plant. The RD will be located 6-km downstream from the Main Dam, completely buffer the fluctuation impacts caused by peak generation and be operated such that the downstream discharges from the RD will follow the existing middle Shire River flow regime in its current state, as if the Project were a run of river plant;
  • A 400 kV double circuit transmission line, 64 km long, connecting the substation at the Main Dam to the Phombeya Substation, and a 132kV transmission line, approximately 7.3km long, connecting the substation at the RD to the existing 132kV transmission line between Kapichira and Tedzani;
  • A minimum flow of 45 m3/s was proposed in the original ESIA based on the assumption that the peaking effect would be dampened over a short distance downstream of the tailrace channel. This flow is to be discharged in two locations; 5 m3/s immediately downstream of the dam through the spillway (to ensure continuous flow in the 600-800 m reach directly below the dam) and 40 m3/s as a flow to be constantly discharged through one turbine. Post agreement to construct the RD, this scheme is being revisited/reviewed.

 Benefits from the project:

  • Increased hydropower production that will stabilize Malawian power system;
  • Cover the presently suppressed power demand;
  • Access to the financially attractive source of renewable energy;
  • Improve the operation of the downstream located plants (existing and planned): Hamilton Falls and Kapichira;
  • Reduce the flood peaks in the areas prone to floods downstream from the dam;
  • Cover the existing and future needs for peak capacity and energy on a long run;
  • Together with the downstream located plants at Shire River, represent one of key players on the regional power market (SAPP) for provision of peak power;
  • Allow the multipurpose operation of the downstream located Kapichira Reservoir, presently prevented;
  • Reduce the siltation of Kapichira Reservoir.
  • Reduced to no load shedding during peak hours
  • Improve private sector participation

Current Progress

  • The Request for Proposals (RfP) was formally announced on 13th December, 2019 by the Minister of Natural Resources, Energy and Mining Hon. Bintony Kutsaira, MP.
  • The project's website was published online and it can be accessed on  https://www.mpathydro.com 
  • The Virtual Data Room (VDR) was uploaded for potential investors/bidders to access project information
  • Webinars were held on 31st January 2020 and 4th February 2020 to encourage potential bidders to seek clarifications concerning the project.
  • The Request for Proposals was advertised on 11th February, 2020 and the documents can be accessed on https://www.mpathydro.com