The Globeleq-led Central Térmica de Temane (CTT) 450 MW gas-fired power project, located at Temane in Inhambane Province in Mozambique has reached financial close and will soon start construction in early 2022. CTT will supply low cost, reliable power to Electricidade de Moçambique (EDM) under a 25-year tolling agreement using natural gas supplied from the Pande-Temane Fields operated by Sasol and ENH, the state-owned hydrocarbon company. CTT is expected to provide electricity to meet the demand of 1.5 million households and will contribute about 14% of the electricity supply capacity available to meet demand in Mozambique.

Debt financing of the US$652.3 million project is being provided by IFC, together with its “B” loan participants FMO and Emerging Africa Infrastructure Fund (together US$253.5 million), US International Development Finance Corporation (DFC) (approximately US$191.5 million) and the OPEC Fund for International Development (OPEC Fund) (US$50 million). The Multilateral Investment Guarantee Agency (MIGA) has provided up to $251.3 million in political risk insurance to the private sector equity investors.

CTT is 85% owned by Mozambique Power Invest (MPI) and 15% by Sasol Africa. MPI is owned by Globeleq (76%) and EDM (24%).

EDM selected Globeleq, EDM and Sasol in December 2017 as part of a competitive bidding process. EDM chose the consortium due to its experience developing and operating gas-fired power projects; competitive cost of capital; and ability to deliver the most competitive tariff. A joint development agreement was signed on 20 June, 2018 to progress the development of the project and bring it to financial close.

The project is aligned with the Paris Agreement and will support Mozambique’s longer-term sustainable energy transition to net-zero by 2050. CTT’s flexible technical and commercial configuration allows for a variable supply of base load and dispatchable power and will deliver complementary power so that Mozambique can maximise renewable energy generation projects on its grid and pursue lower carbon energy development. In addition, the Siemens SGT-800 turbines chosen for the plant can be upgraded to handle high hydrogen content, further reducing the plant’s carbon impact. CTT also anchors a new 563 km high-voltage transmission line (the Temane Transmission Project (TTP)) and secures the first phase of the interconnection of the southern grid to the central and northern grids of Mozambique. Together, the entire value chain (gas development, gas fired power plant and transmission infrastructure) will see an investment of more than US$2 billion.