MCDF Grant Supports Transaction Advisory Services and Due Diligence for Malawi-Tanzania Hydropower Transmission Project

A USD3.88 million grant to prepare a sustainable dam, hydropower plant, and transmission line project in the lower Songwe River basin, in Malawi and Tanzania, was approved by the Multilateral Cooperation Center for Development Finance (MCDF) Governing Committee during its meeting in Beijing on 22 October. The project will be implemented by the African Development Bank (AfDB).

The MCDF grant will support transaction advisory services and due diligence for the development of the project, which will provide 180.2 megawatts of renewable hydropower and integrate national grids through 132-kilovolt (kV) and 400kV transmission lines. It aims to strengthen cross-border power trade under the Southern African Power Pool and regional energy security.

A flagship infrastructure development under the Southern African Development Community Regional Infrastructure Development Master Plan, the project will address power shortages affecting millions of people in Malawi, Tanzania, and neighboring countries while promoting inclusive growth, poverty reduction, flood mitigation, and irrigation.

Activities to be financed by the MCDF grant will include fund investment model structuring and implementation to ensure optimal risk allocation and value for money, as well as the provision of technical, legal, and financial support throughout the procurement process until financial close.

The MCDF grant will also fund the updating of the project’s 2014-2015 technical feasibility studies by Lahmeyer International and 2015 financial studies by the Climate Resilient Infrastructure Development Facility, which confirmed the project’s viability under a public-private partnership, and its Environmental and Social Impact Assessment. The updates will seek to align the project with a suitable investment model.