Shearman & Sterling advised the lenders in connection with the $652.3 million financing of the Central Termica de Temane power project in Mozambique, which achieved financial close on December 8, 2021 and was awarded “Africa Power Deal of the Year 2021” in the prestigious PFI Awards this month.
The project includes the construction and operation of a gas-fired power plant in Temane, Inhambane province together with the financing and construction of the Vilanculos transmission line to connect the project to the national grid. The project is an anchor project for the new 563 km high-voltage transmission line running through Mozambique and secures the first phase of the interconnection of the southern grid to the central and northern grids of Mozambique. It will establish a corridor of electrification and ensure a more stable and secure grid and enable the connection of future renewable generation projects. Together, the entire value chain (gas development, gas fired power plant and transmission infrastructure) will see an investment of more than US$2 billion.
The project is expected to provide electricity to meet the demand of 1.5 million households and will contribute about 14 percent of the electricity supply capacity available to meet demand in Mozambique. The transmission line that is anchored by the project will mean that more than 10 million Mozambicans will have access to electricity for the first times in their homes by 2024. Moreover, the project will support Mozambique’s longer-term sustainable energy transition to net-zero by 2050 and is fully aligned with the Paris Agreement. It will allow Mozambique to pursue lower carbon energy development by offering a variable supply of baseload and dispatchable power that is complementary to the country's renewable energy projects. In addition, with an eye to the developing hydrogen market, the Siemens SGT-800 turbines chosen for the plant can be upgraded to handle high hydrogen content, further reducing the plant’s carbon impact.
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