Acwa Power Moatize thermo-electric is a consortium made up of Brazilian Vale, Japan’s Matsui, Acwa Power of Saudi Arabia as well as domestic shareholders Electricidade de Mozambique and Whatana, which is headed by the widow of both Mozambique’s first president Samora Machel and of South Africa’s Nelson Mandela, Graca Machel.

The project is estimated to cost $US1billion and will be a crucial step toward domestic processing of Mozambican coal, which until now has been exported.

Economists predict that a rise in coal power will significantly drive GDP and exports.

The Economics Intelligence Unit also expects strong growth for the Mozambican economy in 2014-18, driven by investments in extraction of natural resources.

In the initial phase the plant will produce 300 megawatts of power, of which Vale will use 200-250MW. The remainder will be added to the Electricidade de Mozambique power grid and, in a second phase, capacity may increase to 600MW.

After approving the contract, Energy Minister Salvador Namburete noted that the project made it possible to increase the availability of electricity in the country. The national grid currently provides 2000MW of power each year, mostly from hydro-electric dams.

The consortium believes thermal-electricity is a major step to providing Mozambique with an affordable and reliable energy source.