Investment Projects


Kholombidzo Hydro-electric power PPP project

Proposed 210 MW Kholombizo Hydro-Power Project (HPP) is located upstream of the existing power stations along the Shire River. The power plant is a run-of-river type with a Concrete Gravity small dam, 16.8m high. Thus, Kholombizo HPP offers the possibility to be operated in base mode, following the load and responding to the instant changes in power demand. The Kholombidzo HPP site is utilizing the natural head at Shire river, the Kholombidzo falls and Toni rapids, located downstream of existing Matope bridge. The natural head the rapids offer is approximately 55 m. Flow duration curve variability at Kholombidzo can be considered low. The Shire river flow regime at Kholombidzo suggests a minimum turbined flow in the order of magnitude of 100-150 m3/s in order to avoid outages in operation due to insufficient inflow. The design of the powerhouse and number of units’ selection shall take this factor into consideration. The transmission line will be designed to conform to the existing installations as much as possible. It is proposed that the two 132 kV Double Circuit Transmission Lines be run on Lattice Steel Towers and the conductors have to be of type Lynx running in a flat formation. The power will be evacuated to the new Phombeya substation located 16 kilometers from the power plant. The objective of the project is to increase the supply and reliability of power in the country.   
The Kholombidzo HPP is the first step of the cascade development of the middle Shire River. It is located 60 km downstream of Liwonde barrage and 18 km upstream of Nkula HPP. The location requires minimal compensation expenses of the community because the area between the proposed generation site and Kammwamba trading centre is less developed. When the line crosses the M1 road to join the 132kV power corridor, there is a secured wayleave all the way to the proposed Phombeya Substation. The location has a flat terrain, therefore less challenging during construction and maintenance.   
The project is aligned with Government's energy sector and economic development goals as outlined in the National Energy Policy and the Malawi Growth and Development Strategy respectively. The project will benefit Malawians and the Southern African Power Pool (SAPP).Malawians will benefit from the project as it will provide more power to the national electricity grid and their access to electricity for households as well industries will be expedited and increased. Employment opportunities will also be created during and after construction of the project. Implementation of the project will increase Malawi's power generation capacity which will boost industrialization (both import substitution and value addition). It is expected that surplus power from the project will be exported to the Southern African Power and Pool (SAPP) and this will generate foreign exchange for the country.   
A Bankable feasibility study conducted for the project reveals that the investment cost for the project is US$499.5 million and the specific investment cost is US$2,401 per kW. The project IRR is approximated to be 10.8% and the levelized electricity cost is 4.9 US cents/kWh. Additionally the project's Net present Value is US$127.4 million. The project is estimated to take up to 5.5 years to construct and this period includes 1.5 years as the development period.
Government preference is to develop the project through a Public Private Partnership (PPP) arrangement. The project will be implemented following a build-own-operate and transfer (BOOT) model with a thirty years long concession period.  A Special Purpose Vehicle (SPV) will be established to oversee the implementation of the project. After construction an operations and maintenance contractor will be engaged to operate the plant.
The bankable feasibility conducted reveals that the project is technically, economically, financially and environmentally viable. The project is expected to generate up to 210 MW of power. Government plans to start developing the project once financial closure of Mpatamanga project has been concluded. The development phase will cover engineering, mobilization and preparatory works, civil works as well as construction of a transmission line.
 Financial Feasibility   
The project is financially feasible. The financial internal rate of return (FIRR) for the project is 15.2% with a peak tariff of 0.09 US cents/kWh.The financial viability of the Project is confirmed when the FIRR is compared to the investor's opportunity cost of capital at 8.0%. The net benefit at a discount rate of 8.0% is US$ 413 million. These results show that the project is financially viable as the revenues from the project are sufficient to cover its capital costs and operating costs and to provide the investor with an adequate profit.
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