Africa-Press – Malawi. An attempt by the Public Private Partnership Commission (PPPC) to secure local investments into the $1.5 billion Mpatamanga Hydro Power Project has yielded nothing.
This means the project, apart from the 30 percent equity for government through the Electricity Generation Company (Egenco), will be fully financed by foreign investors, making Malawian investors lose out on a huge investment opportunity in the energy sector.
PPPC Chief Executive Officer Patrick Kabambe confirmed that the commission’s attempt to lure local investors has not been successful both at bidding stage in 2022 and during a deliberate move to approach local banks to mobilise resources together.
“There was no local company that participated when we issued a tender to invite bids.
“We even tried to talk to the local banks to mobilise some resources but we found that the interest rates were high, which could have pushed electricity tariffs much higher,” Kabambe said.
Kabambe said there is still a window of opportunity for local investors as available investors are currently working on mobilising resources.
In 2022, an international tender led to the selection of strategic investors that include Electricité de France (EDF) and SN Malawi BV which is backed by British International Investment, Norfund and TotalEnergies.
The project is jointly developed by the Malawi Government and the International Finance Corporation (IFC) as a public-private partnership (PPP) arrangement, making it Malawi’s largest-ever energy project with an estimated power output of 358 megawatts.
The financing structure is a blend of grants, equity, loans and guarantees from global development partners and private investors, making it the largest foreign direct investment venture in the country.
Reserve Bank of Malawi Governor McDonald Mafuta Mwale recently admitted that the local financial sector needed to be stimulated to channel increased resources towards greenfield investments for industrial development that the country needed.
For this reason, the central bank, in collaboration with banks and private sector players, are working on financial structures and a project derisking mechanism with the possibility of bankrolling some strategic projects in the high potential sectors.
The MHSP project is situated on the Shire River and will have two major dams and will also have energy storage capability to ensure supply during peak hours, significantly improving the reliability of the national grid and supporting energy-intensive industries such as mining, agri-business and tourism.
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