China: Mozambique is a target country in the internationalisation of China

Mozambique is a target country in the internationalisation of China Three Gorges and China National Grid and two major hydroelectric projects that are being launched are of interest to these Chinese groups and their Portuguese subsidiaries.

Paul Muxanga, chairman of the Cahora Bassa Hydroelectric Dam (HCB), said recently that the long-awaited construction of the northern plant of the Cahora Bassa hydroelectric facility should be initiated any minute at this time, a project which, according to the Portuguese financial daily Diário Económico, is “in the sights” of the two Chinese groups.

CTG, in partnership with EDP – Energias de Portugal of which it is the major shareholder with 21.35 %, wants to be involved someday construction of this 1,250 megawatt facility, at a cost estimated by the Mozambican government at US$413 million, said the Portuguese newspaper.

China National Grid, which is the major shareholder of Portuguese power grid company REN, which owns 7.5 % of HCB, is positioned as a competitor to CTG in the project.

A spokesman from REN said the project for the northern plant was “very relevant to HCB” and that the company was observing its evolution, as a shareholder of the Mozambican hydroelectric company.

REN’s business plan for 2015-18 provides for increased investment in internationalisation to 900 million euros in emerging markets in Africa and Latin America.

EDP ​​has said that Mozambique “is a strategic market” that “can be an significant vector of internationalisation” for the company, which “will contribute to the strategic development of the sector in the country, particularly the North Cahora Bassa project, to the extent that the Mozambican government sees fit.”

An extra project that is being targeted by China National Grid is the hydroelectric power station of Mpanda Nkua, designed to be the second major hydroelectric facility in the country and awarded to Brazilian construction companies in 2010, but which ran into funding difficulties.

China National Grid as well intends to finance and build the dam and the Mozambican authorities decided to alter the Mpanda Nkua management company’s shareholder structure.

Brazilian construction company Camargo Corrêa was not happy with this move and has demanded compensation for the investment it has made in the project and the return of guarantees provided in return for the concession arrangement, according to the Mozambican press.

The new plans indicated that China National Grid would take between one third and 40 % of the Mpanda Nkua facility, less than the 60 % it wanted, while South Africa’s Eskom, the plant’s next client would have 20 %, Électricité de France (EdF) and Brazil’s Eletrobras would have between 10 and 15 % each, and the rest would be divided between Mozambican national power company EDM and private Mozambican companies.

With an installed capacity of 1,500 megawatts, the power plant is a key investment for the profitability of the transmission line that will be managed by power transmission company Sociedade Nacional de Transporte de Energia (SNTE).

The new transmission line, which will connect the centre to the south of Mozambique, is a partnership between China National Grid, which holds a 46 % stake and responsibility for financing the project, with REN, which kept a 14 % stake, while Eskom and EDM have 20 % each.