Exim Bank, the prospective financier of the 300 megawatts Kam’mwamba coal fired power project says it is ready with funds for the project but that the bank is waiting for the Malawi Government and the Chinese investor to finalise talks on the investment agreement.
This is contrary to what Secretary to the Treasury, Ronald Mangani, said three months ago on the sidelines of a conference organised by Forum on China-Africa Cooperation (Focac) when he indicated that government had already submitted the feasibility study report to the financies and was awaiting feedback.
But according to Exim Bank Chairman, Zhu Ying, the model for the project had been changed from public financed model to private financed model and the bank was yet to receive the new feasibility studies incorporating this change.
Zhu was speaking at a media conference for African journalists held at Exim Bank headquarters in Beijing.
“The project’s progress also depends on the Power Purchas e Agreement between the Chinese investor and Electricity Supply Corporation of Malawi (Escom).
“We are aware of the importance that your country attaches to the project but we are now waiting for the project agreement to be concluded, otherwise we are ready,” said Zhu.
Earlier, Mangani indicated that government was awaiting feedback from the financier having already submitted the final feasibility study report.
Mangani further said another challenge was the registration of a special purpose vehicle, a joint venture company involving the Malawi government and the Chinese investor, expected to operate the power plant.
The power plant is expected to be run by a special purpose vehicle which will sell power to Escom at a commercial rate and the revenue collected will be used to service the loan.
However, Escom is yet to conclude Power Purchase Agreements with several power investors as the issue of power tariffs proves thorny.
The Focac initiative, which is the source of the project’s funds, provides $60 billion package to boost Chinese companies’ investments in Africa and so far, over 30 countries have signed agreements on industrial projects under the three year window.
The Kam’mwamba power project ranks highly among the agreed Chinese government financed projects in Malawi that also include the new Chileka Airport, with an estimated total investment of close to $1.7 billion.