The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
I think the position at the moment is that the project and tariff haven’t officially been approved by EDM/government and NCCL have only spoken about the transmission line having the ‘potential’ to reduce project capex and improve tariff competitiveness. If the project and it’s connection into the transmission line was already formally approved by government, I would agree that this would be worthy of a company announcement.
I also agree that it would have been ideal if CMEC were awarded the contract but the main thing is that the infrastructure seems to be going ahead.
Hi GGG,
At this stage, as I understand it, there is no formal link between the transmission line and the NCCL project, which I assume is why there has been no announcement.
From my perspective, this is just helpful context which seems a step in the right direction.
Thanks
Morning all
I hear from a reliable source (EDM) that the Tender A evaluation for the Moz-Mal interconnector (which relates to the transmission line itself) is now complete and the results have been notified to the bidders. Approval has also been obtained from the Bank.
The successful bidder was L&T from India (link: https://www.larsentoubro.com/corporate/products-and-services/) and the result is due to be published towards the end of August/mid-September. Tender B (relating to the substation) is still under evaluation. I assume that this is to be concluded shortly and the decision will be published around the same time.
To me, this seems like a significant milestone as, whilst not directly project related, it indicates that we have more certainty than ever that the Moz-Mal interconnector will finally get off the ground. With this in mind, new power generation from the Tete region will be required.
The RNS dated 30th December stated:
“Power Market Outlook confirms the Project as one of the most advanced and credible baseload power supply options in Mozambique and one of the most competitive coal projects in the region”
The RNS dated 19th May stated:
“Approval received from relevant parties, including EDM, to conduct further work on optimised transmission integration solution, which is expected to further reduce costs.”
There have been a number of references to the Moz-Mal interconnector in company presentations and tweets so, to me, this recent progress suggests that the required infrastructure to facilitate a project of this kind has got the green light.
Hopefully EPC or tariff confirmation from the company soon!
Hi GGG,
Ok the topic of the Moz-Mal TL, I received the below from EDM earlier today:
We are still exchanging evaluation information with financiers and since it is a regional project it has more complexity but now we are hopeful that by end of JUNE the evaluation will be complete and in JULY it will be published.
So it looks like all is still moving ahead with the TL but slowly…
Hi Lancaster, I don’t think so - nothing has appeared on EDMs tender page yet. I recently emailed a representative of EDM to ask whether contract award was still likely to happen during May (as indicated by the separate tender document) and he responded as follows:
‘Yes we are still hopeful that it can be in the ongoing May.’
That was on the 19th May so, although nothing has been published, it can’t be too far away now!
Cheers.
Hi Beza, yes we have lots of details. The below link includes a technical appendix, which summarises the proposed technology:
https://www.ncondezienergy.com/wp-content/uploads/2020/05/Ncondezi-Project-Update-Presentation-May-2020.pdf
Hi GGG. I’m not aware of any other significant enough projects. I also take comfort from a few plans I found online, which indicate new coal power is intended to feed into this part of the infrastructure - I’ll try to dig out links and share later.
Hi Caterham. It’s due to be this month, according to a separate procurement document on the EDM website relating to auditing of financial accounts during project implementation.
Hi GGG. Yes, that’s right. Fingers crossed.
No problem. I believe the videos were the Moz officials simply reading the bids (part of the process to ensure transparency) but they weren’t actually under consideration at the time. They said at the end of the calls that they would consider the bids before selecting their preferred contractors and announce ASAP. Unfortunately ‘ASAP’ is over 6 months later but at least were nearly there now. I don’t think the doc I shared yesterday would have said May for the main contract awards without a large degree of certainty.
Lancaster, this recent World Bank doc also gives an insight into progress on the transmission line. http://documents1.worldbank.org/curated/en/652711618414528246/pdf/Disclosable-Version-of-the-ISR-Mozambique-Malawi-Regional-Interconnector-Project-P164354-Sequence-No-04.pdf
Yes they did. They tendered for both the transmission line and substation upgrade. EDM procurement docs suggest they were competitive from a price perspective but I understand it’s a quality based assessment, so price isn’t the only factor.
The best we have in terms of timing is the doc I shared yesterday (new procurement process for auditing of accounts during project implementation), which suggests contract award will be this month. Not sure what date though.
To me, the timing of this combined with NCCL’s tweets re the interconnector project/SAPP suggest that the two are connected, i.e. NCCL need the transmission line and the transmission line needs NCCL.
Elizabeth Johnson suggested in the Twitter group that they are hoping for an update on the main project next week and that negotiations continue to be positive (reaffirming last main project update RNS).
I wonder whether the proposed update will coincide with the Moz-Mal interconnector contract award, which is due this month according to the timetable set out in this EDM document...
https://www.edm.co.mz/en/document/tors/tor-moma-financial-audit
ps there was a contract award in relation to a resettlement scheme to facilitate this transmission line on 26th Feb, so it is definitely happening.
Agreed CF73.
For what it’s worth, I don’t think the delay in news flow for the main project is a concern, just poor expectation management.
EDM confirmed to me directly that contract award for the Moz-Mal interconnector project is due for April 2021, which I think is material to our tariff negotiation (due to cost implications). This adds another layer of commercial sensitivity, so I think the ‘slow’ progress is, unfortunately, to be expected.
Plus... contract to be awarded in April according to EDM... with CMEC in the running for both the transmission line and substation contracts...
The timing for the interconnector project ties in very nicely with the timing for proposed completion of the Ncondezi power plant (end of 2023).
Not to mention that EDM have just (last week) confirmed their intention to award another contract to CMEC elsewhere in Moz (not related to the Moz-Malawi transmission line but still provides helpful context).
https://www.edm.co.mz/en/document/tenders/provisional-notification-tender-results-and-contract-award-tender-01stiplota2019
I guess that, if they are buys and the buyer is the same as the 6m ‘trade’ on the 14th (unlikely), we’ll find out by way of RNS, as today’s trade(s) would push them over 3%.
...genuine buys or something else?
Looks like CMEC were the most competitive for the Mozambique- Malawi substation contact:
Contract: Design, Supply & Installation, Commission and Handover of the Matambo 400 kV Substation in Mozambique and extension of the existing Matambo 220 kV Substation
https://drive.google.com/drive/mobile/folders/1xRcrKyRj5Dggd0-uZ801E0JtQQzgRsYx/1lKzQcdwjWYMMQM3HuthqllKQRlIf6boZ?sort=13&direction=a