Regional electricity interconnection

Mozambique

Strengthening the South Africa – Swaziland Mozambique electricity interconnection

Technical Brief

Financing	Agence Française de Développement
Beneficiary	MOTRACO
Loan amount	€ 12.5M
Date of approval	24 April 2003
Date of agreement signature	10 October 2003

Objective

The project aims at strengthening power interconnection between South Africa, Swaziland and Mozambique.

Project Content

The AFD loan refinanced Motraco’s investment in the electricity transport line from South Africa to Swaziland and Mozambique.

Following the investment of the Anglo-Australian group BHP Billiton in Mozal’s aluminium smelter in Mozambique, the electricity companies of Mozambique (EDM), Swaziland (SEB) and South Africa (Eskom) created the independent transport operator Motraco in order to connect the South African network to Mozal via Mozambique and Swaziland by two 400kV high voltage lines.

The first investment phase amounts to 93 million dollars and was financed by the EIB, JBIC (Development Bank of Japan) and Motraco shareholders and reached completion in mid-2000. Mozambique and Swaziland benefited from the interconnection with improved quality of power supply for populations.

The doubling of the Mozal smelter plant required the Motraco interconnection to be strengthened in order to raise available power for Mozal from 425 MW to 850 MW. The technical option chosen to increase Motraco’s transport capacity was to improve compensation on the two existing lines. This second phase required additional financing.

The project is co-financed by AFD with a €12,5M loan and EIB, which has allocated a €10M subsidized loan (on Lomé resources) and €3.5M in venture capital to finance subscriptions to Motraco’s equity by Electricidade de Moçambique (EDM) and Swaziland Electricity Board (SEB), shareholders of Motraco with Eskom.

Motraco was designed by its shareholders as a cost effective company with revenues exclusively made from wheeling charges (power transport fees). Incomes from the sale of energy to Mozal’s aluminium plant more or less matches the purchase of electricity by Eskom, give or take line losses. Wheeling charges cover loan depreciation, financial fees and operating costs. Network management, maintenance and control have been subcontracted to Eskom before being reverted to the national electricity entities from 2010 onward.

Financing Plan

In view of the time constraints for Mozal’s investment, the works on the electricity transport line were carried out on bridge loan financing guaranteed by Eskom.

Motraco wished to refinance this bridge loan by long-term resources matching the investment.

Works were completed in mid-2003.

Disbursement for the AFD loan took place in January 2007.