Govt to go solo on Kam’mwamba

Government has abandoned its partner Chinese financier China Gezhouba on the Kam’mwamba Coal-fired Power Generation and has since relocated the project to Energy Generation Company (Egenco) to implement it with government as the sole financier.

The Kam’mwamba Coal-fired Power Generation project was to be implemented jointly by the Malawi Government and China Gezhouba Group Corporation (CGGC) at an estimated cost of $667 million, through a loan from the Exim Bank of China.

However, the project stalled due to what the former chief executive officer of Kam’mwamba Coal-fired Power Generation Overton Mandalasi, described as ‘lack of financial closure’.

‘Financial closure’ occurs when all the project and financing agreements have been signed and all the required conditions contained in them have been met. It enables funds (such as loans, equity, grants) to start flowing so that project implementation can actually start.

“If we had gone into financial closure, the project could have taken off. However, the ministry is in a better position to explain,” he said.

Ministry of Energy spokesperson Sangwani Phiri told Weekend Nation that government has now taken a bold step towards sourcing financial resources to fund and support the establishment of the new plant at Kam’mwamba.

“Government will finance this energy project—to be facilitated by Egenco, which is the major stakeholder in this endeavour—with a financial injection of K31.9 billion from government.

“Simply put, government will finance all the activities for the new operation to be done by Egenco, such as doing environmental impact assessment and environmental social impact assessment including all other activities akin to the general operationalisation of the new company,” he said. 

Phiri said Egenco will start the project all over again as the previous implementer, KPGC, did not do anything on the ground and has nothing to hand over to the new implementer.  

“As such, Egenco will not takeover any contractual arrangement from the former company as KPGC never acquired services from anywhere that could attract liabilities.

“In the foregoing, there is literally nothing that could otherwise be factored in the new undertaking,” he said.

KPGC is expected to set up a coal-fired power plant to generate 1 000 megawatts, with phase I constructing 300 megawatts.