Mozambique is rated a DAC1 country meaning that is is among the poorest, least developed and fragile states in the world. At least half of the country’s 24 million people are estimated to live below the poverty line. Male life expectancy is 50 years and women live on average just two years longer. Mozambique’s economy has grown at between 6% and 8% in the decade up to 2015, but fell back to 3.5% in 2016 as global commodity prices dropped and there was a Sovereign debt crisis. Growth in 2016/17 is forecast to turn out higher, mainly due to increased economic activity and increases in commodity prices.
One of Mozambique’s newest and strategically most important power stations was refinanced in December 2017 with the support of the Emerging Africa Infrastructure Fund (EAIF).
EAIF signed a Participation Agreement with the International Finance Corporation (IFC) to provide a $21 million B loan to Central Termica de Ressano Garcia S.A. (CTRG). Other lenders in addition to the IFC, are ABSA Bank and Proparco, the French development finance institution. FMO, the Dutch development bank, also provided a B loan under the IFC loan to CTRG. The club of lenders disbursed debt facilities totalling $189 million.
Completed and brought into operation in early 2015, the 175MW plant at Ressano Garcia is located near the border with South Africa, about 70 miles from Maputo. The facility is owned by CTRG and is currently operated by the Finnish power station builder and operator, Wartsila.
CTRG is owned 51% by Mozambique’s integrated electricity utility Electricidate de Mozambique (EDM) and 49% by the South African Sasol Group (Sasol). Sasol is an international energy and chemicals business, listed on the Stock Exchanges in Johannesburg and New York.
The power station helps to boost national base-load power and monetises the gas resource of the country; and is a strategic and economic development asset in a fragile, poor and underdeveloped country.
The country has recently discovered very large natural gas reserves, which when commercially exploited should help transform the economy. 81% of people are involved in agriculture, 13% in services and 6% in industry. Unemployment is estimated at around 24%.
This is a very effective public/private partnership model where the developer has taken the up-front risk and brought Mozambique an asset essential to maintaining the country's economic progress.