Mining & Trade News

Local firm Rukuru Power Company says it is seeking a term loan of US$146.4 million to finance the construction of a 100-megawatts coal-fired power plant in Rumphi District, Malawi.

Managing Director of Rukuru Power Company Lincoln Bailey says in a brief of the project published by the Malawi Investment and Trade Centre that the project which will be developed in two phases as part of a broader 250MW project, is expected to offer a reliable baseload power supply to the national grid.

He states that the first 100MW phase will consist of two units of 50MW each, using coal sourced primarily from the nearby Mchenga Coal Mine and supplemented by coal from other domestic mines.

He explained that while the financial indicators for the project such as an Internal Rate of Return (IRR) of 10.2%, a net present value of US$27.8 million and a 10.8-year payback period demonstrate its feasibility, closing the financing gap remains a critical problem.

Bailey further discloses that although a Partial Risk Guarantee had initially been secured from the African Development Bank (AfDB), it was later withdrawn due to pressure from Western financiers who have adopted a no-coal funding stance.

“We are now actively seeking strategic investors or equity partners willing to support Malawi’s immediate energy needs with a realistic view of our context,” he says.

The planned site is located 16 kilometres north of Mchenga Mine, near the M1 road and about 500 metres from Lake Malawi. Power generated from the plant will be transmitted through a new 132kV line to a substation at Bwengu, approximately 65 kilometres to the south, facilitating integration into the national grid.

He explains that the company has already made significant strides in preparing the project for implementation. These include the signing of a Memorandum of Understanding (MoU) with the Ministry of Energy, a Power Purchase Agreement (PPA) Term Sheet with the Electricity Supply Corporation of Malawi (ESCOM), and an Engineering, Procurement, and Construction (EPC) contract with Power China.

He reveals that an Operation and Maintenance agreement has also been concluded with South Africa-based Murray and Roberts.

Bailey says the project is aligned with the Government of Malawi’s energy goals and it is a major step in addressing the country's chronic electricity shortages and boosting industrial productivity.

“This is a viable and strategic investment that will provide dependable electricity to support Malawi’s economic development. This plant will help stabilize electricity supply and meet rising demand”.

Rukuru Power Company remains optimistic about securing the necessary funding and pushing ahead with the project despite the shifting of global financing landscape for coal-based infrastructure.

Malawi is struggling with power blackouts that are mainly attributed to inadequate generation and unreliability of the system as the country mainly depends on hydropower which is affected by climate change induced problems such as floods.

The country is pushing to diversify to other sources such as coal, which is a reliable source of power, but funding for coal fired power projects is a problem with financial institutions preferring renewable energy projects.

Malawi’s other planned coal fired power plant, Kamwamba in Neno, is also seeking financing after feasibility studies were successfully completed.

The country has various deposits of coal mainly in the Northern Region and lower Shire areas.

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