KHOLOMBIDZO HYDROPOWER PROJECT

Project description

The Kholombidzo hydropower project is located in Blantyre District, Southern Malawi. This strategic location allows the project to harness the energy of the Shire River, which is the only outlet of Lake Malawi. The project consists of the following main components:

1. Diversion Dam, formed by a 16.8 metres high Concrete Gravity Dam located 160 metres from the Matope Bridge with gated spillway;
2. Two headrace tunnels waterway on the left bank;
3. Two pressure power tunnels with surge shafts and underground penstocks, located at the left abutment;
4. Surface powerhouse, housing 4 vertical Francis turbines of the installed capacity of 53.3 megawatts each; and
5. 132 kilovolts transmission line, 16 kilometres long, connecting the power plant to the Phombeya Substation.

The Kholombidzo project offers a compelling investment opportunity with numerous benefits, including:

• Increased Revenue Streams: Benefit from enhanced hydropower production, stabilising Malawi's power system and tapping into suppressed demand.
• Renewable Energy Opportunities: Leverage a financially attractive source of clean energy
• Diversified Power Generation: Enhance peak capacity and energy provision, ensuring long-term sustainability.
• Regional Market Influence: Join the Southern African Power Pool (SAPP) as a key player, supplying peak power and shaping regional energy dynamics

Financial requirements

Total project costs are estimated at EUR 451.2 million (US$ 499.5 million)

Financial feasibility

Under consideration of economic and financial aspects, the proposed project layout is found to be economically and financially viable, under the various sensitivity analyses performed, resulting in the relatively low generation levelised costs of 4.5 United States cents per kilowatt-hour (4.9 US$ct/kWh).

Key commercial data for the investment project are as follows:-

• Investment Costs: US$ 499.5 million
• Specific Investment Cost: 2,401 United States Dollars per kilowatt (USD/kW)
• Project Internal Rate of Return: 10.8%
• Levelised Electricity Costs: 4.9 United States cents per kilowatt-hour (USct/kWh)
• Net Present Value, NPV (ta=8%): US$ 127.4 million

Project feasibility

Full Feasibility Study and Environment and Social Impact Assessment (ESIA) for the proposed Kholombidzo site have already been done. Further to this, detailed designs and the documents required for tendering for construction works are already in place.

The implementation of Kholombidzo project is recognised as one of the priorities in Malawi’s Integrated Resource Plan (2017), which is a comprehensive roadmap that outlines the country's energy strategy and development plans from 2017 to 2036. The resource plan aims to ensure a sustainable energy mix, promoting economic growth, energy security, and environmental sustainability. The project is expected to be implemented within the period of five years and six months, subject to availability of financial resources.

Proposed investment model

The Government of Malawi intends to implement the Kholombidzo Hydropower Project either through a Public-Private Partnership (PPP) scheme, leveraging collaborative financing and expertise, or through Government-led financing, supplemented by strategic support from development partners.

Contacts

The Secretary for Energy, Private Bag 309, Lilongwe 3, MALAWI

Alfonso Chikuni, Principal Secretary for Ministry of Energy, alfonsochikuni@gmail.com

C. Chizonga, Chief Economist: cchizonga@yahoo.com