The World Bank Board of Executive Directors has approved a $350 million grant from the International Development Association (IDA) to support Malawi’s Mpatamanga Hydropower Storage Project (MHSP), a large infrastructure operation aiming to transform the country’s energy landscape and its economic development trajectory.
At completion, subject to the mobilization of private financing, MHSP will significantly increase the country’s installed capacity, delivering 1,544 gigawatt-hours of dean energy annually.
This additional energy will help supply electricity to over a million new households in the country and will create thousands of job opportunities.
“MHSP is a top priority for our government as the least-cost option in meeting our growing energy demand and achieving our access targets,” said Ibrahim Matola, Minister of Energy in a state “Once operational, this project will help drive long-term energy security and support lasting, inclusive economic growth. Energy access is fundamental to reducing poverty, fostering economic growth, and attracting private investment.”
MHSP was co-developed by the Government of Malawi and the International Finance Corporation (part of the World Bank Group) as a public-private partnership (PPP) with an expected overall cost of over $1.5 billion including financing costs during construction.
In September 2022, the Malawian Government selected a consortium consisting of Electricité de France (EDF) and SN Malawi BV (owned by British International Investment, Norfund and Total Energies) as MHSP’s strategic sponsors using an intemational competitive tender process.
The project’s financing is expected to consist of grants, equity contributions, loans and guarantees from various development partners and private sector stakeholders; and will represent the largest foreign direct investment in Malawi’s history.
MHSP’s main and regulating dams on the Shire River will generate clean energy and store power to supply electricity during peak demand hours, helping to improve the reliability of Malawi’s national grid.
The hydropower facility will also boost the grid’s capacity to support the growing demand of the country’s mining companies, an industry which holds significant potential to boost the country’s economic development prospects over the coming decade.
“This new hydropower project is a game-changer for Malawi, capable of catalyzing transformative change in productive economic sectors such as mining, agri-business and tourism. As the country works on driving its economic development agenda, this new source of clean and reliable energy will help drive business growth, create jobs, and improve the lives of millions of Malawians,” said Nathan Belete, World Bank Division Director for Malawi, Tanzania, Zambia and Zimbabwe.
MHSP is one of several large energy projects in Malawi supported by the World Bank Group, reflecting the institution’s strong commitment to supporting this sector as an important enabler of economic growth and development.
Other important investments include the Emergency Power Restoration Project boused on rehabilitating the Kapichira power station, the Mozambique-Malaw Regional Interconnector Project, and the recently approved Accelerating Sustainable and Clean Energy Access Transformation (ASCENT) in Malawi project aiming to improve last-mile electricity connections for the Malawian population.
“The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives.
IDA is one of the largest sources of assistance for the world’s 74 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change to the 1.3 billion people who live in IDA countries.
Since 1960, IDA has provided $496 billion to 114 countries. Annual commitments have increased steadily and averaged about $34.7 billion over the last three years (FY20-FY22), with about 70 percent going to Africa.
