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Great Lakes Africa Energy (GLAE) has signed a Memorandum of Understanding (MoU) with the Government of Mozambique to construct a 250 MW gas-fired power plant in the country at an estimated value of US$400 million.
As part of the agreement, GLAE will develop, finance, build, own and operate the power plant, which is to be supplied by natural gas from Mozambique's Rovuma Basin. Located in the north of the country on the border with Tanzania, the basin has the largest known gas reserves in the country, holding an estimated 180 trillion cubic feet of gas.
In August 2016, the government launched a tender to allocate gas extracted from two specified areas of the basin. GLAE was successful alongside Norway's Yara International, who bid to use the gas to produce fertilizers and between 30 to 50 MW of electricity, and Shell Mozambique, who proposed to produce diesel and between 50 to 80 MW of electricity from the gas.
The three companies were awarded a total of up to 462 million cubic feet of natural gas a day. The results were announced in January 2017.
With 250 MW generation capacity, GLAE's gas-fired power plant will be one of the largest conventional sources of electricity in the country.
The government's decision to allocate a portion of its vast offshore gas resources for domestic power projects is driven by a desire to accelerate sustainable economic growth, of which domestic energy production is a significant factor.
It is hoped that the power plant will catalyse the development of several other industrial projects which have been abandoned due to the lack of a steady power supply.
Commenting on the MoU on behalf of the Government of Mozambique, Bruno Senguaio, Assistant to the Minister, said:
“Mozambique has considerable renewable and conventional energy resource and is fast becoming a significant energy producer. Our Government’s chief priority is to ensure a secure and reliable energy supply for people of Mozambique. This is why the project is so important."