Ncondezi Energy has provided an update on historical development cost reimbursement negotiations with China Machinery Engineering Corporation (CMEC) for work on the integrated Ncondezi 300MW coal-fired power project and coal mine in Tete, Mozambique.
The African power development company cited “positive progress” regarding agreement of Project historical development costs to be reimbursed to the Company at Financial Close.
“Following an extensive third-party audit review of the Company's historical costs over a 10-year period, and following successful negotiations with CMEC, Ncondezi has been able to demonstrate US$26.7m of historical expenditure on the Project,” said CEO, Hanno Pengilly.
CMEC agreed "in principle" to $21m to be recognised for future reimbursement with $5.7m of costs relating to historical senior and project management costs under negotiation. The $21m represents a 24% premium to previously agreed historical development costs.
Pengilly noted that CMEC and Ncondezi have agreed to finalise historical development cost once the Project power tariff has been approved by Electricidade de Moçambique ("EDM").
Shares in Ncondezi Energy have doubled since the beginning of November 2020 from 3.30p to 4.95p to open 8.81% higher this morning at 5.98p following the announcement.
He said a historical development cost would also have an impact on CMEC's subscription price “to be agreed for the 60% share in the Project and the Project developers' fee.”
He added, “With this work now complete, NCCL can focus its resources on the tariff approval process with EDM and finalising the EPC contracts with CMEC early in the new year."
Ncondezi’s integrated 300MW coal power plant and mine project in the Tete Province supports Mozambique's energy strategy of universal electricity access by 2030. According to the World Bank, only 30% of the Mozambican population had access to energy in 2017.
The Ncondezi Project would provide 300MW of reliable and available power helping to close the infrastructure gap of the region and serving as a catalyst for economic development.
The power plant will be designed to be equipped with state-of-the-art emissions controls technologies that will reduce local air pollutants, minimizing the plant's impact on the environment and ensuring its compliance with the most stringent emission standards
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