Independent power company Globeleq, energy and chemicals multinational Sasol and Mozambique State-owned power utility Electricidade de Moçambique (EDM) have announced financial close of the Central Termica de Temane (CTT) power project.

Located at Temane, in the Inhambane province, CTT comprises a 450 MW gas-fired power plant, which will supply power to EDM under a 25-year tolling agreement.

CTT is expected to provide electricity to meet the demand of 1.5-million households and will contribute about 14% of the electricity supply capacity available to meet demand in Mozambique. The project is expected to provide first power in 2024.

Debt financing for the $652.3-million project is being provided by development finance institution the International Finance Corporation (IFC), together with its B-loan participants FMO and Emerging Africa Infrastructure Fund, which together are providing $253.5-million; the US International Development Finance Corporation (DFC), which is providing about $191.5-million; and the OPEC Fund for International Development (OPEC Fund), which is providing $50-million.

The Multilateral Investment Guarantee Agency has provided up to $251.3-million in political risk insurance to the private sector equity investors, Globeleq, Sasol and EDM said in a joint statement issued on December 8.

"The project is aligned with the Paris Agreement and will support Mozambique's longer-term sustainable energy transition to net zero by 2050. CTT's flexible technical and commercial configuration allows for a variable supply of baseload and dispatchable power and will deliver complementary power so that Mozambique can maximise renewable energy generation projects on its grid and pursue lower carbon energy development.

"In addition, the Siemens SGT-800 turbines chosen for the plant can be upgraded to handle high hydrogen content, further reducing the plant's carbon impact," the companies said.

Further, CTT also anchors a new 563 km high-voltage transmission line, the Temane Transmission Project (TTP), and secures the first phase of the interconnection of the southern grid to the central and northern grids of Mozambique.

This will establish a corridor of electrification and ensure a more stable and secure grid, and enable the connection of future renewable generation projects.

The TTP is owned by EDM and will be funded using grant and concessional finance provided by the World Bank, the Africa Development Bank, the Islamic Development Bank, the OPEC Fund and the Norwegian government.

The entire value chain, namely gas development, gas-fired power plant and transmission infrastructure, will see an investment of more than $2-billion.

"This pioneering project has the potential to deliver significant economic and social benefits by helping meet Mozambique's growing demand for power, and supporting the country's economic recovery and the region's energy transition. This is our third power investment in Mozambique, and we remain committed to supporting the sustainable development of the country's electricity sector," says IFC regional industry director for infrastructure: Middle East and Africa Linda Munyengeterwa.

Additionally, DFC financing for this project will support people and businesses throughout Mozambique by reducing the cost of electricity and increasing generation. These are important development gains that will spur further economic development in communities across the country.

"As a country that is at risk from the worst effects of climate change, our government fully supports the Paris Agreement. We are working on our long-term decarbonisation plans in line with that Agreement and CTT is fully in line with our transition, which also includes developing hydro, solar and wind projects," said Mozambique Minister of Mineral Resources and Energy Ernesto Max Elias Tonela.

The project will be built by the Spanish contractor TSK, using efficient and well-proven Siemen's gas turbine technology. TSK has extensive experience in designing and constructing similarly sized combined-cycle power plants and will leverage its in-country construction experience during the 34-month construction period.

CTT is expected to generate around 830 jobs during construction and 90 permanent jobs during operations. This excludes engineering and other work performed off-site. Mozambicans will be prioritised for jobs during both construction and operations. It is estimated that the project will support the creation of 14 000 indirect jobs and livelihoods when it becomes operational in 2024.

"The OPEC Fund supports the development of the Temane power plant, as well as the complementary transmission infrastructure through its private and public sector loan facilities. Our assistance reflects our commitment to Sustainable Development Goal 7- Affordable and Clean Energy," OPEC Fund director-general Abdulhamid Alkhalifa said.

"Once completed, CTT will increase the supply of efficient and affordable energy to households, businesses and industries, contributing to social and economic development in Mozambique and the region," he said.

Further, Globeleq CEO Mike Scholey said it was committed to supporting the Mozambique government's aim of achieving universal electricity access by 2030 and positively impacting the regional energy landscape.

"The government of Mozambique, through EDM, is a strategic partner for Globeleq as we grow to develop other projects in renewables, such as the Cuamba solar and battery project and other wind and solar developments under way," he added.

"Sasol is proud to partner with EDM and Globeleq in this exciting Temane project, which will create jobs, enable sustainable and lower carbon energy supply and long-lasting in-country benefits. Sasol is committed to a meaningful contribution towards the development Mozambique," said Sasol energy business executive VP Priscillah Mabelane.

"A new phase is opening in the energy sector, with EDM leading the processes of generating increasingly cleaner electricity to promote the country's industrialisation and export to the regional market," said EDM chairperson Marcelino Gildo Alberto.