The Mozambican Government has approved a Temane Thermal Plant support package, including financing up to $65 million from the World Bank, tax reduction and extension of the concession to 30 years.
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11/11/2026
by
Lusa
O Mozambican government intends to resume the project of Temane Thermal Plant, Inhambane, including financing up to $65 million (€58.3 million) from the World Bank, reduction of fees and extension of concession to 30 years.
It is concerned with the Package of Measures to Support Recovery of the Temane Thermal Plant Project (CTT), recently approved by the Council of Ministers, with the Government justifying the decision with the delays in the implementation of the infrastructure, considered of national economic and strategic interest, according to Resolution 88/2026 of 4 November.
CTT is the concessionaire of the Temane Thermal Power Plant, a project that will produce electricity from Inhambane natural gas and that integrates EDM state electricity among shareholders.
According to the document, the execution of the project suffered “significant delays as a result of force majeure events, namely cyclone Freddy and tropical storm Filipo, as well as the abandonment of the works by the contractor.”.
In order to enable the completion of the plant, the government approved the “funding mobilisation with the World Bank to ensure the capital contribution of EDM [Mozambican Electricity] up to the amount of US$65 million, in accordance with EDM’s obligations as a shareholder of the project.”.
The resolution also authorises an extension of the period of grant of the project.
The executive determines in the same resolution the “extension of the term of the concession contract for six months additional to the 18 initially granted under the ‘Tolling Agreement’ due to force majeure events, resulting in the modification of the term of the Grant Agreement from 28 to 30 years”.
The package also includes financial benefits for the project through the reduction of concession fees that, according to the diploma, go from “from 3% to 2% during the period of debt amortisation” and “from 8% to 5%, after the maturity of the debt and until the end of the concession”.
Among the measures approved is also the “temporary waiver of dividends, up to a value of USD 39 million (EUR 35,0 million), above which dividends are taken over in favour of EDM”, as well as the “renunciation of the right to claim compensation for late payment” to an amount of approximately EUR 10.8 million (EUR 9,7 million).
The Council of Ministers also authorised an “adjustment of 11.1% in the Capital Recovery Rate component”, one of the measures considered necessary to strengthen the economic and financial balance of the enterprise.
However, the effective entry into force of the package is subject to additional agreements between the parties concerned. The resolution states that the measures are conditional on the negotiation of safeguards to protect the interests of EDM and consumers.
Among these conditions is the requirement to “ensure that any extraordinary gains from the project, including on the performance assurance of the TSK contractor in legal proceedings, will benefit from future tariff reduction in favour of EDM.”.
The document also provides for “the exemption or cancellation of potential interest on late payment calculated under the trade agreement”, up to the limit corresponding, in present value, to the additional contribution of the tariff adjusted during the trading period.
Another of the safeguards is the “review of the management agreement for the construction of the plant concluded with CTT, in order to ensure greater intervention by EDM in the management, monitoring and decision-making processes”, seeking to reduce risks of further delays in the completion of the works.