The European Union (EU) has provided 20 million euros (about K16 billion) grant for the implementation of the Malawi-Mozambique Power Interconnection Project to connect the national grid to the Southern Africa Power Pool (Sapp).
The commitment follows Friday’s signing of the implementation agreement between the Electricity Supply Corporation of Malawi (Escom) and KfW of Germany, the implementing agency.
The funds are drawn from the African Investment Facility (AfIF), which will be managed by KfW through a blending operation, whereby EU grant funds are blended with loans from financial institutions.
The EU grant will be complemented also with contributions from the government of Malawi as well as a World Bank loan.
EU Ambassador Sandra Paesen said the commitment is in realisation that energy is one of the main drivers of inclusive and sustainable growth and jobs, observing that lack of access to reliable power is currently preventing Malawi from realising its full economic growth and development.
Said Paesen: “Businesses and people are affected by regular power cuts and the high costs for diesel generators.
The project will provide Malawi’s private business sector with a more secure supply. This will in turn create an environment where business development can accelerate.
“A secure energy supply will further lead to improved productivity as businesses will be in a position to operate uninterrupted while optimising their investments”.
Speaking on behalf of KfW, German Ambassador Jurgen Borsch said Malawi needs to find alternative power sources because it will take another three years for the country to import electricity from Mozambique and other Sapp countries through the transmission line.
Escom chief executive officer Allexon Chiwaya said Malawi is ready for the project as its implementation will lessen power challenges facing the citizenry, adding that some studies, including resettlement plans for the affected communities are ready.
The scope of the project is to interconnect the Mozambique and Malawi Powe systems at 400 kilovolts through the transmission line from Matambo substation in Tete province in Mozambique to Phombeya substation in Malawi in Balaka District.