Ncondezi power station

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Ncondezi power station is a power station in Songo Dist, Tete, Mozambique with multiple units of varying statuses, none of which are currently operating. It is also known as Solgenics power station (Unit 1, Unit 2).

Location

Table 1: Project-level location details

Plant name	Location	Coordinates (WGS 84)
Ncondezi power station	Songo Dist, Tete, Mozambique	-15.595833, 32.764722 (approximate)

The map below shows the approximate location of the power station.

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Project Details

Table 2: Unit-level details

Unit name	Status	Fuel(s)	Capacity (MW)	Technology
Phase II	cancelled	coal: unknown	1500	CFB
Unit 1	announced	coal: unknown	150	CFB
Unit 2	announced	coal: unknown	150	CFB

Table 3: Unit-level ownership and operator details

Unit name	Owner	Parent
Phase II	Ncondezi Coal Co [100%]	Africa Finance Corporation; Seritza Ltd; small shareholder(s); Solgenics Ltd
Unit 1	Solgenics Ltd [100%]	natural person(s) [38.1%]; Africa Finance Corporation [9.7%]; Seritza Ltd [9.5%]; small shareholder(s) [6.7%]
Unit 2	Solgenics Ltd [100%]	natural person(s) [38.1%]; Africa Finance Corporation [9.7%]; Seritza Ltd [9.5%]; small shareholder(s) [6.7%]

Project-level coal details

• Coal source(s): Ncondezi coal mine

Background

The project involves an open pit thermal coal mine and integrated power plant. The plant would begin as 300 MW but was planned to grow to 1,800 MW. The Company was targeting commissioning of the 300 MW power plant in 2017 and commercial operations in 2018. The plant would consume 7.2 million metric tons of coal annually. The power plant was expected to be built in phases of 300 MW units using domestic grade coal. Ncondezi Coal Company Limited (NCCL) completed a feasibility study for the power station in 2012.

According to Ncondezi Power, the project received a Framework Agreement with the Government of Mozambique in April 2013. The Mining Concession was granted, the power plant Environmental Social Impact Assessment was approved, and the Coal Supply Agreement was signed. Ncondezi agreed to a timetable with the Mozambican Government to complete the Final Form Power Purchase Agreement by the end of 2014. Project financial close was targeted by the end of 2014, followed by construction in 2015.

In October 2014, Ncondezi Energy signed a non-binding agreement with China’s Shanghai Electric Power Company (SEPC) for the power station. The agreement would make SEPC the largest shareholder in the coal-fired station, with a minority stake in the Ncondezi coal mine.

In June 2015, Ncondezi said it secured binding engineering, procurement and construction bids for the proposed power plant and had received bids for a mine contractor. The company said its pre-tax loss for 2014 was pushed wider by a write-down on its coal assets, but that it intended to move forward with the project. Talks on the 300 MW coal plant were ongoing with SEPC in March 2016. No mention was made of a phase two, which appeared to be shelved or abandoned.

In 2016, Ncondezi and SEPC proposed a pulverized coal (PC) boiler for the plant, rather than a circulating fluidised bed (CFB) boiler, to lower solid particles and sulfur oxides emissions. The change required a new Environmental and Social Impact Assessment (ESIA) study. The companies were targeting submission of an updated ESIA during May 2016.

Financial close on the 2 x 150 MW plant was planned for 2017, and commissioning of unit 1 in 2020. Ncondezi Energy said the power station could be expanded in the future.

In June 2017, Ncondezi Energy started a new partner search after it abandoned talks with Shanghai Electric Power Co on May 26 to secure funding for the mine and plant.

In November 2017, Ncondezi Energy signed a non-binding offer (NBO) with China Machinery Engineering Corporation (CMEC) and General Electric South Africa. The NBO was for a binding joint development agreement as well as engineering, procurement and construction (EPC) and operations and maintenance (O&M) contracts for the development, construction and operation of the 300 MW Ncondezi coal power and open pit mine project. Negotiations would be exclusive until April 2018. Under the agreement, CMEC and General Electric were expected to acquire 60% of the power plant and lead project financing. Financial close was expected in Q4 2018. As well as EPC for the plant, the pair would build a transmission line to connect the plant to the grid, which would be transferred to national utility Electricidade de Moçambique on completion. Boiler technology would be changed back to circulating fluidised bed.

In July 2018, Ncondezi Energy submitted an updated tariff proposal that included a 10% reduction in the previously agreed tariff rate. In November 2018, Ncondezi Energy announced that it had received a letter of support from the Ministry of Mineral Resources and Energy (MIREME) for the plant and mine, and also signed a Memorandum of Understanding (MoU) with the Mozambican state power utility Electricity de Mozambique (EDM).

In July 2019, Ncondezi Energy said it had signed a joint development agreement with China Machinery Engineering and General Electric to develop the 300 MW project and mine. Ncondezi said it was expected to hold a 40% interest in the project and would be responsible for 40% of the development costs to final close.

The companies were hoping to finalize tariff negotiations in early 2020. However, in June 2020 Electricidade de Mocambique said the technical and market assumptions for a tariff agreement submitted by Ncondezi Energy in March 2020 were out of date. EDM said an updated transmission integration study and Mozambican power market outlook study had been commissioned, and were targeted for completion in the third quarter of 2020. In addition, CMEC was prepared for a possible exit by GE from the joint power project (and related coal mine) after GE announced in 2020 that it was exiting the global coal-power market.

In August 2020, Ncondezi Energy submitted an updated and revised Transmission Integration Study for its Ncondezi 300 MW coal plant to EDM.

As of May 2021, Ncondezi Energy was still awaiting formal feedback from EDM following study submissions in December 2020. The company also noted that its EPC power plant contract with CMEC was nearing completion, and that it received approval to conduct further work on an optimised transmission integration solution to reduce project costs.

In September 2021, Ncondezi signed the EPC contract with CMEC at a virtual signing ceremony. The contract confirmed CMEC as the main contractor to provide design, engineering, manufacturing, procurement, construction, erection, installation and commissioning of the power station on a turnkey basis. Ncondezi said the contract was valid for three years, and subject to standard conditions being met before construction could start, including the achievement of financial close for the project.

A Possible Pivot Strategy

The pledge in mid-September of President Xi Jinping at the United Nations General Assembly that China will stop building coal-fired power plants overseas placed some doubt over the future of the project, though a spokesperson for the company reacted to the announcement by saying that he expected more advanced projects such as the Ncondezi plant to be honoured by Chinese parties.

In January 2022, shares in Ncondezi Energy Ltd. fell 15% after the company said that it is awaiting further clarity on China's position relating to financing coal projects abroad before progressing with the Tete, Mozambique power project tariff. The African power-development company said the availability of Chinese financing for coal-power projects abroad was critical for the project and that it was ready to proceed with the tariff once this had been addressed. "We understand this to be a global issue affecting all Chinese backed coal power development projects abroad, and that this impact is under review by the relevant Chinese authorities," the company said. Ncondezi added that its partner, China Machinery Engineering Corp., remains committed to the project and continues to lead the financing process. In the meantime, the company said it had started a cash-conservation strategy to extend its working capital past the first half of the year so that it wouldn't need to raise extra funds in the immediate future.

In March 2022, the company confirmed that they were still in a deadlock as the awaited any information regarding the Chinese investors' involvement with the project. In May 2022, Ncondezi announced that following a strategic review, the site in Tete intended for the coal plant also had potential for a grid-scale solar project. With the ability to use existing studies conducted for the coal plant, the company has the potential to streamline solar project development and costs. Though they are not yet given up on the future of their coal plant, this news offers a promising pivot strategy for the late-stage, Chinese-funded project that was otherwise halted by China's pledge.

In October 2022, Ncondezi Energy said that they would be looking for a buyer in order to offload the coal plant and mine projects. They cited ongoing delays as the reason for the decision and stated that they would be repositioning themselves as a sustainable energy developer.

In January 2023, it was reported that Ncondezi Energy was still seeking funding partners for developing a 300 MW coal-fired power plant in the Tete area, amid reports that the company had secured land for a 300 MW solar project at the same site. See Ncondezi solar farm.

In March 2023, a news release announced a company name change from Ncondezi Energy Limited to Solgenics Limited, allegedly to reflect the company’s new “focus on renewable energy development.” The company has delisted from AIM in London and as per its website and public announcements made in 2023, focuses on its flagship solar project.

As of May 2024, there were no apparent developments on the proposed coal plant.

Coal mine

According to Ncondezi Power, "The Ncondezi coal mine will be an open pit, low strip ratio, contractor mining operation producing 1.3 million tonnes of coal over a 25 year life of mine to supply to the adjacent power plant." Ncondezi was granted a Mining Concession. The mine had estimated coal reserves of 4.7 billion tonnes and resources of 120 million mineable tonnage in situ. Please refer to Ncondezi Coal Mine.

Financing

Shanghai Electric Power Company of China was expected to invest up to US$25.5 million for the development of the project and in return would obtain a 60% share.

In August 2016, Ncondezi Energy secured US$3 million from the African Finance Corporation (AFC) to develop the Ncondezi coal plant. The loan would be used to pay charges which were not included in the joint development agreement between Ncondezi Energy and Shanghai Electric Power (SEP). The loan was to be reimbursed in two tranches, the first of $1 million in 2017 and the other, $2 million, 24 months later.

In May 2017, it was reported that Ncondezi Energy had drawn down a US$2.19 million shareholder loan and needed to repay double that amount. The company was in negotiations with loan holders to extend the repayment date. Discussions were also underway with SEP for US$3 million to fund ongoing development work. The next anticipated step was a US$25.5 million payment by SEP to pay for the remainder of the project's development and its financial close. At that point SEP would have a 60% share in the project.

In June 2017, Ncondezi Energy said it had received a US$582,000 loan from existing shareholder loan holders and senior management as funding to look for a new partner and to provide working capital. The company started the new partner search in early June after it abandoned talks with Shanghai Electric Power Co on May 26 to secure funding for the mine and plant.

It was announced that KPMG and Synergy Consulting were acting as financial advisers for the project.

In January 2020, Ncondezi Energy released a financial model for the mine and power station. Under the model, Ncondezi Energy, along with China Machinery Engineering Corporation (EPC provider) and General Electric, would provide equity as project stakeholders. China Export & Credit Insurance Corporation (Sinosure) submitted a letter of interest to provide political and commercial risk insurance on the project, which suggested that Chinese financial institutions may be involved. The African Finance Corporation was also expected to be involved with financing. The financial model also stated that indicative debt terms had been received from the Industrial and Commercial Bank of China (ICBC).

In September 2021, the company stated that financial closure will take place in 1H 2022. However in March 2023 the company's management in an interview referred to the financing difficulties of the coal plant following China's pledge not to finance coal plants abroad.

As of December 2023, the project had not reached financial close.

Articles and Resources

Additional data

To access additional data, including an interactive map of coal-fired power stations, a downloadable dataset, and summary data, please visit the Global Coal Plant Tracker on the Global Energy Monitor website.