On Tuesday May 30th, 2023, the Eswatini Electricity Company (EEC) signed a 25-year Power Purchase Agreement (PPA) with an Independent Power Producer (IPP), Middle Lusutfu Hydropower (Pty) Ltd for the proposed 13.5MW Lower Maguduza Hydro Power Scheme. This project which will not only increase Eswatini’s power generation by 20% but will also provide employment for at least 100 Emaswati and services contracts to service providers throughout the PPA duration.
The Lower Maguduza Hydro Power Station (LMHPS) will be located on the Lusutfu River near Sidvokodvo and construction is set to commence during the first quarter of 2024 and the first unit from the plant is expected to be commissioned by the last quarter of 2026. The power plant’s construction will include a diversion weir, a 2km 66kV transmission line, a foot bridge across the dam and substation upgrades. There will also be works to intergrate the power plant at Sidvokodvo Substation.
Making his remarks during the signing ceremony of the PPA on Tuesday the 30th May, a visibly excited EEC Managing Director Ernest Mkhonta stated that this project was initiated over 10 years ago and he was excited to be the one finally signing the agreement, which marked the beginning of the project. “Not only is this project a milestone in our strategic objective to increase local generation, but it has come at the right time when we need to be robust in addressing the shortages of power within the region,” Mkhonta said.
He mentioned that EEC has been tasked with a huge responsibility to establish the country’s baseload electricity and as well increase generation capacity and strengthen the network infrastructure.
“A corporate strategy has already been developed to ensure that we realize the set goals and met the set targets, and this project is one of the ways we can achieve our goal to give access to electricity to all citizens and also ensure EEC remains financially sustainable,” Mkhonta said. Transactional Advisor for the project Dr. Shaheem Ahmed also expressed his appreciation for the milestone achieved over the past years, which has led to the signing of the PPA. Dr. Ahmed said it has been a long journey with a lot of challenges, but they are elated that this one of the first of its kind venture in the Kingdom of Eswatini.
The electricity generated by the power station will be sold to EEC under the 25-year PPA at an inflation linked tariff. At the end of the PPA term, EEC will take over the plant at no cost to the company and in extension, to the consumer.
Shareholders in this project are principally Old Mutual, Public Service Pension Fund (PSPF) and Eswatini National Provident Fund (ENPF). The Lenders to this project are Nedbank Eswatini (Lead Arranger), Standard Bank Eswatini, PSPF and ENPF. Approximately E1bn will be invited into the Eswatini economy from this project.
More details can be found on the EEC website.