Clean electricity for generations to come

Mozambique

Carlos Yum, director of the Mphanda Nkuwa Hydroelectric Project Implementation Office (GMNK), talks to The Energy Year about harnessing Mozambique’s vast potential for hydroelectric generation and making investments for lasting socioeconomic impact. GMNK is the special-purpose entity established by the government of Mozambique, for the Implementation of the Mphanda Nkuwa Hydroelectric Project in Mozambique.

What are the pillars of the Mphanda Nkuwa Hydroelectric Project?
Responsible development is a foundational principle of the Mphanda Nkuwa Hydroelectric Project, and we prioritise long-term sustainability. Sustainability, however, goes beyond what we build or the electricity we generate. We’re committed to adhering to Mozambican law and following best practices and international ESG guidelines.
The project rests on three key pillars: financing, strategic investment and market development. Above that, we have social and environmental impact. It is a massive undertaking that encompasses both power generation and the associated transmission network needed to evacuate that power. Importantly, we’re not just building for today. Mozambique boasts vast hydroelectric potential for several generations, and Mphanda Nkuwa is just one step towards harnessing it.
The project’s benefits extend beyond Mozambique’s borders. Studies rank Mphanda Nkuwa as the country’s and the region’s most cost-effective new generation asset, and they indicate that it has great potential for integrating regional electricity markets.
GMNK is committed to implementing community development through extensive consultations to ensure the improvement of social and human indexes and the delivery of medium- and long-term benefits to local communities through active engagement and co-operation with all stakeholders. Infrastructure plans must be designed with an understanding of community needs, ensuring they contribute tangible benefits for local economic and social development.

What can the Mphanda Nkuwa consortium partners deliver to the project?
Through a rigorous selection process that ensured transparency, competitive bidding and attractive conditions, supported by the African Development Bank and the World Bank, the project has secured the participation of prominent international players TotalEnergies, EDF and Sumitomo. This consortium does not just bring the financial muscle of internationally reputable investors which enables scale and competitive access to international financial markets, but also technical expertise in major hydropower development, EPC procurement and operations, as well as environmental compliance and ethical business practices.
Together with EDM and HCB, development goals will make Mphanda Nkuwa a transformative and generational investment for Mozambique.
While international partnerships offer significant advantages, they come at a cost because investors prioritise projects that align with their core strengths, return expectations, bankable security structures and long-term goals. However, this is a necessary trade-off for securing world-class partners. Without these partners, access to top-tier banking institutions would be more difficult because they typically choose to allocate funds to the most robust ventures.
What we are managing to deliver is a project that balances public-sector objectives such as low energy costs, development impact, resilient infrastructure and knowledge transfer with attractive potential returns to private-sector stakeholders.

How important is the project for the country’s energy strategy?
The project has immense significance for Mozambique and the region in the context of the Energy Transition Strategy. Its abundant, clean electricity will be a major contribution to the nation’s long-term energy security and will create a strategically located source of electrons for green industrialisation.
Mphanda Nkuwa’s social and economic benefits will accrue beyond communities in the immediate vicinity, as the utilisation of local resources and services will create long-term jobs, contribute to SME development and stimulate local economies. Beyond Mozambique, the project can help decarbonise the regional energy mix by supplying competitively priced clean power to neighbouring countries that rely heavily on coal for power generation.

How can the Mphanda Nkuwa project create opportunities for local businesses?
The Mphanda Nkuwa project is a golden opportunity for Mozambican companies to join the big leagues of infrastructure development. Being local, however, will not be enough. To truly win, local businesses need to partner with international experts to gain valuable experience and certifications and raise their capabilities to global standards.
Domestic companies must create local and international partnerships and obtain and grow technical and management skills to become more effective and relevant active partners. Building strong, lasting relationships with international players will then open doors for future international collaborations. Mozambican banks also have a role to play, and they must step outside their comfort zone to support the upgrading and upskilling of local companies with financing.
True success will mean training and empowering local companies for the global stage, bringing quality work and employment. Collaborations with international consultants and firms enable knowledge transfer, but documenting that knowledge and ensuring it remains long after the consultants leave – ultimately, successful local content development – is a team effort.
In this context, GMNK has hired 11 young professionals from both public and private universities nationwide. The government needs to provide clear regulations, and international private companies have a responsibility to work with local partners. Together, we can build not just infrastructure, but a future where local companies play a leading role in the country’s, sustainable economic development.

What are some of the financing conditions linked to the project?
Financiers such as the IFC [International Finance Corporation] and EIB [European Investment Bank] and others require environmental and social impact assessments, public consultations and community development plans at the highest international standard as conditions for providing finance. Through these processes, we have heard a variety of perspectives from environmental NGOs, community leaders and local authorities. NGOs have proven to be valuable partners, offering constructive contributions and collaborative engagement, while others have maintained a more oppositional stance. Our strategy remains to focus on transparency, ensuring we follow established best practices and engage and communicate regularly and transparently with all stakeholders.

What are some of the next steps in the development timeline?
This year, we are working towards securing partial risk guarantees from the World Bank and the African Development Bank. These guarantees are a crucial credit enhancement for Mozambique’s national electricity company to sign the power purchase agreement necessary for the project to go ahead.
Finalising the concession agreement is also a top priority, both for investors and lenders, as uncertainty around this agreement could deter potential investors. We are also initiating the financing process for the transmission infrastructure in co-ordination with the government.
We have made progress towards securing investors and substantial expressions of interest from reputable international financiers for the generation and transmission segments. The project has made considerable technical progress through the several studies that are being conducted together with strategic investors, and the sponsor intends to bring the project into commissioning by 2031.

Read our latest insights on:

• Mozambique