Intra Energy coal mining company to construct new 120MW power station in Malawi

Malawi’s Minister for Energy, Ibrahim Matola, and IEC Executive Director and CFO Jonathan Warrand at the MOU signing ceremony on 15 March 2013 (Courtesy of Intra Energy)

Intra Energy Corporation (IEC) announced today that it will construct and operate a 120MW (net) coal fired power station in Malawi through a wholly owned subsidiary. The company signed a Memorandum of Understanding (MoU) with the Government of Malawi on the 15 March 2013 for the power plant that will be built at Chipoka, Salima.

In this MoU, Intra Energy with the Malawian Government have agreed that the electricity generated from the power station in Chipoka will be sold to the Electricity Supply Corporation of Malawi (ESCOM) and other third parties. This will be done through separate power purchase agreements and transmitted and distributed by ESCOM under a Wheeling Agreement.

Following the signing of the MoU, the power station project, “Project Pamodzi”, will enter its feasibility stage, with construction likely to begin earliest in March 2014 (see image below).

The Chairman of IEC, Mr Graeme Robertson explained

This project is very significant as the MOU was signed directly with the Government of Malawi rather than by the power utility, ESCOM. Malawi currently produces approximately 287MW from mainly hydro resources which are subject to climate change and unlike coal-fired plants, are not base load generation. The coal supply for this generating facility will be supplied from IEC’s Malcoal Mine in Malawi and be backed by available coal from IEC’s mining operations in Tanzania. This forms a central part of the company’s policy of developing power projects locked into coal supply from IEC, thereby creating profit centres for the coal supply and equity in the generating plant as well as providing to the country and its people the electricity so important in industrialisation, village electrification and economic development.

IEC also has a MoU with the Tanzania Electric Supply Company Limited for a 200MW coal fired power station, which will consume about 700,000 tonnes of coal per annum.

This comes along with announcements that the Australian-based mining and energy company has acquired two new exclusive prospecting licences, which adds to its portfolio in Malawi.

Project Pamodzi is a welcome development as the shortfall in electricity damages Malawi’s economy, highlighted in the country’s Economic Recovery Plan. One study conducted last year suggested that Malawi loses USD 4,215 million per year due to power outages. This is a challenge for mining operations in the country. The Nation newspaper reported last year that Paladin Kayelekera uses about 1.5 million litres of diesel every month to power generators for the uranium mine in Karonga. The company wants to connect to the national grid by September 2013.

Project Pamodzi (120MW coal fired power station for Malawi) Development Timetable (Courtesy of Intra Energy)