According to a World Bank press release, the Bank's Board of Executive Directors decided on last week to provide Mozambique with a 42 million dollar grant, and Malawi with a loan of 15 million dollars, both from the International Development Association (IDA), that part of the World Bank group that provides soft loans and grants for the world's poorest countries.
The release adds that Mozambique is expected to receive a grant of 24 million dollars from a Norwegian trust fund administered by the World Bank and a grant of 20 million euros (22.1 million dollars) from the German government.
The project, says the release, will interconnect the Mozambique and Malawi transmission systems to enable both countries to engage in bilateral and regional power trade in the Southern African Power Pool (SAPP).
"The new Mozambique-Malawi Regional Interconnector project will establish a transmission link between the two countries to meet increasing electricity demand in Malawi and create opportunities for trading in the SAPP", said Dhruva Sahai, the Task Team Leader of the project.
The project includes construction of a 218 kilometre, 400 kV high voltage alternating current transmission line, grid connections, and associated infrastructure including substation works.
The new line will start at the Matambo substation in the western Mozambican province of Tete, and end at Phombeya substation in Balaka District in southern Malawi.
"With these investments, Malawian households, businesses, and farmers will benefit from increased access to reliable electricity services, that are vital to improve the country's productivity and competitiveness in the domestic and regional markets", says the release, while the Mozambican electricity company, EDM, "will receive additional hard currency revenues, which could be utilized for the country's ongoing domestic electrification efforts".
Deborah Wetzel, the World Bank Director for Regional Integration for Africa, the Middle East and Northern Africa, commented "This is an important project for the region. It will create conditions to expand access to millions of people in the region living without electricity, and help decarbonize the Southern African power systems, which are currently dominated by coal generation."
The project "responds to Mozambique's sectoral priorities to emerge as a regional energy hub, by exporting power to Malawi. It also increases the country's potential for exporting electricity through the SAPP to many other countries in future," noted Mark Lundell, the World Bank Country Director for Mozambique.