Guernsey-registered Bushveld Minerals Ltd announced on 22 May that it has signed a 30-year concession agreement with the Madagascan government for its Imaloto integrated coal power project. The concession follows the signing of a power purchase agreement (PPA) with national utility Jiro sy Rano Malagasy (Jirama) for the project in November 2017 (AE 359/10). The plant is scheduled to begin operating by 2021.
The concession agreement gives Bushveld subsidiary Lemur Holdings Ltd the right to build, own, operate and maintain an initial 60MW coal-fired power plant in Imaloto, Toliara province, and build a 200km 138kV transmission line to evacuate power from the plant. The agreement also aims to facilitate any future discussions with Jirama on further lines to connect large customers, as well as granting authorisation for road and other associated infrastructure for the project and adding provisions for lenders.
Under the terms of the PPA Jirama will only take 10MW from the plant, with the remainder sold to large energy consumers in the south of the country.
Lemur Holdings chief executive Prince Nyati said that “the signing of the concession with the government paves the way for Lemur to move towards construction of the project, subject to concluding the environmental and social impact assessment (ESIA) and achieving financial close. Once completed, this project will, for the first time in the history of Madagascar, interconnect the south region from west to east, including the towns in between.”
Completion of a full technical and financial feasibility study for the power plant and transmission line is expected in June and the ESIA by the end of the year.
According to Bushveld Minerals chief executive Fortune Mojapelo, Lemur will begin engaging lenders this year. “In addition, 2018 is an election year in Madagascar and we will be monitoring the political developments closely. Overall, I am pleased to see the significant progress made on the project and delighted with the ongoing positive cooperation with the Madagascan government.”
The political atmosphere has grown increasingly charged in the run up to presidential elections which are scheduled for later in the year. Rallies by opposition MPs in April resulted in the deaths of two protestors at the hands of security forces. The protests were sparked after President Hery Rajaonarimampianina managed to force changes to the electoral code through parliament which the opposition claim reduce transparency, as well as potentially blocking the candidacy of former president Marc Ravalomanana.
Ravalomanana was ousted in a coup in 2009 and went into exile in South Africa. He did not contest the 2013 election won by Rajaonarimampianina, who defeated former interim leader Andry Rajoelina, who is also expected to stand next year.
Madagascar has been increasing its profile as a frontier investment destination in recent years, particularly following a conference held in Paris in December 2016, where investment of $6.4bn was promised by donors and investors (AE 338/10).
A number of power initiatives have made progress since then. Symbion Power refurbished the 40MW Mandroseza heavy fuel oil (HFO) plant in 2017, tendering is underway for a 25MW solar power project through the World Bank Group’s Scaling Solar programme, Siemens and TSK signed a memorandum of understanding to add up to 300MW last year, and Aggreko and Jovena have brought online thermal plants (AE 365/10, 361/13, 355/10). Attempts have also been made to kickstart some of the numerous hydroelectric projects in the country.
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