(Alliance News) - Ncondezi Energy Ltd on Wednesday said it has entered into an agreement with Mauritius-based renewables firm GridX Africa Development to finance and develop a solar battery project in Mozambique.
The company, which is developing the Ncondezi coal mine and power project in Mozambique, said the solar power project which will supply energy to a undisclosed hospitality customer.
The project is estimated to generate revenue of USD198,000 in the first 12 months after it is operational through a 15-year offtake agreement. Following this, revenue is expected to rise by 2.0% annually.
Ncondezi said: "The solar facility has been designed to produce 660,000 kilowatts an hour per annum, providing over 90% of the hotel's power needs. The solar energy generated will be utilized to provide power for the lodge's daytime load and for charging the battery pack.
"The remaining power (estimated at less than 10% of overall needs) will be generated by the installation of a 165 kilo-volt-ampere diesel generator which is part of the project design envelope and as back up for periods of low solar power generation or sustained high power consumption levels."
The project also replaces existing generators, saving USD80,000 per year for the offtake customer, equivalent to a 29% cost reduction.
GridX Africa AssetCo is a firm specifically created to fund the project and it has two share classes. GridX Africa Development will hold 100% of the A shares with Ncondezi holding the B shares.
Ncondezi added: "Through these holdings, Ncondezi will have the right to appoint up to four directors and GridX two directors to the board of the GridX SPV. GridX has the right to acquire Ncondezi's interest in the GridX SPV for a fair market value in the event of a default by Ncondezi. GridX will provide operations & maintenance services for the project in accordance with market-related commercial terms."
Commissioning for the project is targeted within eight months and Ncondezi expects cashflows at the start of the second quarter of 2020.
Also, Ncondezi has entered into a loan facility with India-based Seritza Ltd, securing working capital of USD750,000. The funds will be available for withdrawal from January until the end of June and will be repayable within 24 months of first drawdown. It will attract an annual interest charge of 10%.
The firm said: "The board considered a number of funding options and believes the working capital facility to be the most cost-efficient solution to allow the company to progress key development milestones on the 300 megawatt Ncondezi project over the next three to nine months."
Shares in Ncondezi were 0.5% lower at 5.32 pence each in London on Wednesday morning.
By Eric Cunha; ericcunha@alliancenews.com
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