Announcement of Mozambique, Malawi Boost Electricity Trade on July 17, 2007

Mozambique, Malawi Boost Electricity Trade Contacts In Washington : John Donaldson (202) 473 1367 jdonaldson@worldbank.org Christopher Walsh (202) 473 4594 cwalsh@worldbank.org In Maputo: Rafael Saúte (258-2) 1482324 rsaute@worldbank.org In Lilongwe: Zeria Banda (265-1) 770 611 zbanda@worldbank.org WASHINGTON, July 17, 2007 – The World Bank Board of Directors today approved two International Development Association (IDA) credits* totaling US$93 million for Malawi (US$48 million) and Mozambique (US$45 million) that will increase the availability and reliability of low cost, environmentally friendly electricity in the Southern Africa region, increasing industrial competitiveness and fostering economic growth. As the second phase of the Southern African Power Market Program, the Mozambique-Malawi Transmission Interconnection Project will connect Malawi to the Southern African Power Pool (SAPP), allowing two-way energy trade between the two countries. This will ensure much-needed diversification in Malawi ’s electricity supply and allow the export of any off-peak power surpluses. It will also provide Mozambique ’s energy sector with a new revenue source. “The interconnection will allow Malawi to reap the full benefits of membership of the Southern African Power Pool, both to import electricity when necessary – particularly if there’s a drought – and also to export any surplus electricity Malawi doesn’t use at night-time,” said Wendy Hughes, World Bank Senior Energy Specialist and the project’s Task Team Leader. For Mozambique, it will build approximately 135 km of 220 kV transmission line and extend the existing Matambo substation. On the Malawi side, approximately 75 km of 220 kV transmission line will be constructed and a new 220 kV substation will be installed. The project will provide technical assistance, capacity building, training, and equipment necessary for the Electricity Supply Corporation of Malawi (ESCOM) and Electricidade de Moçambique (EDM) to strengthen and expand the networks to maximize the benefits of power trading. It will also help replace worn-out, inadequate, or obsolete equipment in order to remove critical bottlenecks in the networks that could impede the flow of traded electricity. Southern Africa Power Pool The Southern Africa Region as a whole is entering a period of generation capacity shortage. At least 1,000 MW of additional capacity will be required each year to meet demand growth. Much of the new demand could be met through large, regional generation projects. Regional trade in electricity is expected to increase, highlighting the need to address transmission-related constraints. In August 1995, Southern African Development Community member countries created the SAPP by concluding an Intergovernmental Memorandum of Understanding and related agreements. The utilities of 12 Southern African countries were its original members. The main grid systems of Botswana, the Democratic Republic of Congo, Lesotho, Mozambique, Namibia, South Africa, Swaziland, Zambia, and Zimbabwe form the existing regional network. Angola, Malawi, and Tanzania are not yet connected. In February 2006, membership in the SAPP expanded to include private generation and transmission companies. ### For more information on the World Bank’s work in sub-Saharan Africa, please visit: www.worldbank.org/afr For more information on the World Bank’s work in Mozambique , please visit: www.worldbank.org/mozambique For more information about World Bank’s activities in Malawi visit: www.worldbank.org/malawi For more information about this project visit: http://web.worldbank.org/external/projects/main?pagePK=64283627&piPK=73230&theSitePK=258644&menuPK=258672&Projectid=P084404 *The credit is provided on standard International Development Association (IDA) terms, with a commitment fee of 0.35 percent, a service charge of 0.75 percent over a 40 year period of maturity which includes a 10-year grace period.