60mw solar power IPP gets k3bn boost

The African Trade Insurance Agency (ATI) under its Regional Liquidity Support Facility has given a $4.4 million (about K3.6 billion) renewable liquidity guarantee to the 60 megawatts (MW) Salima Solar PV Plant being implemented by JCM Matswani Solar Corp Limited.

The funds will be used in the event of late payment by the State-owned Electricity Supply Corporation of Malawi (Escom). The two firms have a 20-year power purchase agreement (PPA) for the Salima Solar Power project.

This is the second project in the country to benefit from the facility, after the Nkhotakota Solar Power Plant, which has an initial installed capacity of 21MW.

In a statement, JCM Matswani Solar Corp Limited country director Phylip Leferink said the firm will enter into operations phase this month.

He said:  “The support of ATI played an important role in enhancing the project’s bankability and contributed to JCM’s focus to develop high-quality, innovative and state-of-the-art projects across sub-Saharan Africa.

“The Salima Solar Power project is positively changing Malawi’s energy landscape whereby JCM is firmly committed to continue to play a pivotal role in further developing the country’s energy sector.”

The 60MW Salima Solar Photovoltaic (PV) Plant will be the first solar PV in Malawi to connect to the national grid and will be instrumental for the country’s underdeveloped electricity sector, which has an installed generation capacity of around 439MW. 

The energy generated, at an estimated annual average of 154 gigawatt-hour, will be exclusively sold to Escom under a 20-year PPA.

The facility policy will be for an initial tenor of up to 10 years and enable up to $78 million (about K64 billion) of total project financing.

ATI chief executive officer Manuel Moses is quoted as having said in a statement that while they remain confident that Escom will honour its payments to JCM Matswani, the agency looks forward to providing similar support to eligible renewable energy IPPs in Malawi and across the continent.

He said: “The Government of Malawi views private investment as critical to achieving its goals for the power sector.

“This is evidenced by Escom’s recent positive track record in meeting its payment obligations to Malawi’s only operational IPP in a timely manner as recorded by ATI’s Transparency Tool.”

Malawi Energy Regulatory Authority (Mera) consumer affairs and public relations manager Fitina Khonje was yet to respond to our questionnaire.

But in an earlier interview, she observed that despite the signed agreements between Independent Power Producers (IPPs) and Escom which Mera approved, Malawians were yet to see work on the ground, a move that forced the Ministry of Energy to initiate a review of Mera’s licensing procedures.

Khonje admitted that since the 2018 base tariff adjustment, there has not been a movement in attracting more IPPs to the national grid; hence, the country is stuck with expensive power from Aggreko gensets up to now.

In October last year, the Ministry of Energy indicated that it will audit the progress of IPPs and that those not serious will be replaced.

This followed revelations from Mera that out of 10 IPPs that were approved to generate and sell power to Escom, only two are operating.