The African Development Bank (AfDB) Group on Monday approved a $3.04 million (K1.25 billion at the current exchange rate) grant to finance the Kholombidzo Hydroelectric Power Plant feasibility studies on Shire River.
Malawi will contribute $0.23 million (K95.2 million) (seven percent) of the total study cost of $3.27 million (K1.35 billion), the banks statement released on Tuesday said.
Reads the statement in part: “The grant aims to produce a full bankable feasibility study for the future development of a power generation project to contribute to the expansion of electricity generating capacity in Malawi, which would ultimately help to address electricity shortages and enable the delivery of reliable energy and electricity access expansion in Malawi.
“The study is consistent with the objectives of the Malawi Growth and Development Strategy II (MGDS II) which emphasises the importance of putting in place a foundation for long-term economic growth through improved infrastructure and investment climate.”
The Kholombidzo Hydro Power Plant is expected to cost $330 million (K136 billion), according to a list of public sector projects in need of foreign collaboration by the government on Opportunities for Investment and Trade in Malawi.
In Malawi, where more than 80 percent of the population lives in rural areas, access to electricity is very minimal with less than 10 percent of the 14 million population connected to the national grid.
This situation impacts negatively on the environment through deforestation while at the same time slows down social and economic development.
Last year, Malawi received another energy boost when the Millennium Challenge Corporation (MCC) approved $350.7 million (K145 billion) grant.
The MCC compact is a single-sector programme designed to increase incomes and reduce poverty by revitalising Malawi’s power sector and improving the availability, reliability and quality of the power supply The compact’s Power Sector Revitalisation Project seeks to increase the capacity and stability of the national electricity grid and bolster the efficiency and sustainability of hydropower generation.