Announcement of 7.5 Million Dollars Credit to Malawi for a Second Power Project on September 6, 1973

• ' FOR_ IMMEDl~Tf; RELEASE • INTERNATIONAL DEVELOPMENT ASSOCIATION 1818 H STREET, N.W .. WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IDA Press Release No. 73/73 Subject: $7.5 million credit to Malawi September 6, 1973 for a Second Power Project The International Development Association (IDA), an affiliate of the World Bank, is providing $7.5 million to help £inane~ a power project to be carried out by the Electricity Supply Conmission of Malawi (ESCOM). The Commonwealth Development Corporation (CDC), of the United Kingdom, is par- ticipating in the financing of the project with a loan of up to $6.1 million. Malawi, a landlocked country heavily dependent on agriculture, is rich in water resources and fe.atures Africa's third largest lake, Lake Malawi. The • lake discharges into Malawi's principal river, the Shire river, which falls about 1,300 feet over a distat1ce of 50 miles in its middle reaches. The total power potential in this stretch of the river is estimated at 415 MW. As a first step toward harnessing this potential, a 24-MW hydroelectric station was constructed at Nkula Falls. The project, financed by CDC, was comm:.lssioned in 1965. A second hydrostation at Tedzani, which was jointly financed by IDA, CDC and the African Development Bank and which was coDIIlissioned this year, provided for the installation of 16 megawatts of generating capacity. This project also included a 3-MW thermal station at Lilongwe, and the construction of about 200 miles of transmission lines in the southern and central regions. The p~esent project, which is required to meet the projected demand for power, has been designed by ES COM' s consultants. Comprising the maj_or part of - \ • ESCOM's 1973-77 generation development program, the project consists of: Note: Money figures are expressed in US dollar equivalents. /more IDA P.R. No. 73/73 - Malawi - power proj~ct - 2 - • The construction of a 20 MW hydroelectric power station as an extension of the existing Stage I, Tedzani power station; • • The construction of a barrage over the submerged weir of Stage I, to enable generation of 20 MW by the new plant and increase the output of the generation equipment installed under Stage I from 16 MW to 20 MW; • A 12 MW gas turbine unit for installation in Blantyre, in- itially to avoid a power shortage in 1975/76 and subsequently after commissioning of Tedzani Stage II, for operation as a standby and peaking unit; and • • A study of ES COM' s tar:!.ff structure. 5. The IDA credit of $7.5 million will finance the foreign exchange cost of Stage II of the Tedzani Falls hydroelectric development as well as of the tariff study. The CDC loan of up to $6 .1 million will finance the foreign exchange costs of the gas turbine and engineering and administration, plus 50% of all local costs. These canponents are estimated at $4.6 mil- lion. The balance of $1.5 million under the CDC loan provides a margin for possible shortfalls due to currency fluctuations and/or cost overruns. The IDA credit is being made to the Republic of Malawi for a term of 50 years including 10 years of grace. It is interest free, but carries a service charge of 3/4 of 1% per annum to cover IDA's administrative expenses. The Government will relend the proceeds of the IDA credit to ESCOM at an interest rate of 7~ per annum and for a tenn of 24 years including a grace period of four years. - 0 - • • September 6, 1973 TECHNICAL DATA PROJECT: Second Power COUNTRY: Malawi TOfAL COST: $14 .27 million IDA FINANCING: $7.5 million, 50 years, 10 years of grace, interest free except for 3/4 of 1% service charge to cover IDA's administrative expenses. OTHER FINANCING: Electricity Supply Commission of Malawi, $2.15 million; • Commonwealth Development Corporatioo (CDC), up to $6 .1 million • IMPLEMENTING ORGANIZATION: The project will·be carried out by the Electricity Supply Commission of Malawi (ES COM), Ministry of Trade and Industry, P,.o. Box 186, Blantyre, Malawi. PROJECT DESCRIPTION: Project copiprises major part of ESCOM's generation development program for the 4-year period FY 1973 through FY 1977, and consists of: The construction of a barrage over the submerged weir constructed in Tedzani Stage I; the c.onstruction of a 20-MW hydroelectric power station as an extension of the existing Tedzani Stage I power station; addition of a 12-MW gas turbine unit, initially to avoid a power shortage in 1975/76 and subsequently for oper.-·ation as a standby and peakiug unit; and a tariff study. PROCUREMENT: All IDA financed goods and services will be procured by inter- national competitive bidding. CONSULTANTS: · Detailed engine~ring of the project is being c.arrie~ out by Messrs. Watermeyer, Legge, Piesold and Uhlm.ann (civil works) and Kennedy and Donkin (mechanical and electrical works), both of the United Kingdom .. It is expected that these consultants will supervise construction of the project. Their servtces would be financed retroactively by CDC. Consultants will be employed to carry out a study of ESCOM's tariff structure.. They will be selected from a Us t of firms to be agreed • upon ·between the Government and the Association • ESTIMATED CCMPLETION DATE: Note: 1978. Money·figures are expressed in US dollar equivalents. - 0 -