(Sharecast News) - Ncondezi Energy updated the market on the integrated Ncondezi 300MW coal-fired power project and coal mine in Tete, Mozambique on Wednesday, reporting that the company and its partners were still waiting formal feedback from Electricidade de Moçambique (EDM) and the country's government, following submission of all agreed studies in December.
The AIM-traded firm said an engineering, procurement and construction power plant contract with the China Machinery Engineering Corporation (CMEC) was nearing completion.
Approval had been received from relevant parties, including EDM, to conduct further work on an "optimised transmission integration solution", which the board said was expected to further reduce costs.
"Following the submission of all the requested updated studies in December, as per the agreed timetable, the company's focus has been on progressing tariff negotiations with EDM," said chief executive officer Hanno Pengilly.
"Whilst we remain confident the Ncondezi Project offers a uniquely advanced stage proposal with a competitive solution to Mozambique's energy generation targets we continue to await formal feedback from EDM and the government.
"The company is proactively engaging with both EDM and the government to reach a conclusion as soon as possible."
Pengilly said agreement on the tariff would "unlock" the remaining milestones, including finalisation of the 60% subscription price to be paid by CMEC, the power purchase agreement, the power concession agreement, and financial close.
"In the meantime, we continue to progress other parallel work streams including signing of the engineering, procurement and construction agreement contract for the power plant with CMEC.
"This is the largest construction contract for the Project and we are in the final stages of completing it ahead of signing."
In addition, Pengilly said the firm had obtained all necessary approvals, including from EDM, to further develop an optimised transmission integration solution as identified in the 2020 transmission integration study.
"This has strong potential to reduce the transmission capital expenditure, further enhancing the project's competitive offering.
"This work is not expected to impact tariff negotiations as it will be completed in parallel to them.
"We believe the project is in a very strong position despite frustrating delays to the completion of the tariff negotiations," Hanno Pengilly concluded.
At 1558 BST, shares in Ncondezi Energy were down 11.64% at 2.96p.
8 Sep 2015 05:12