World Bank approves grant financing for landmark 358.5 MW hydropower project

At completion, subject to the mobilisation of private financing, MHSP will significantly increase the country’s installed capacity, delivering 1544 GWh/y of clean energy. This additional energy will help supply electricity to over 1 million new households in the country and will create thousands of job opportunities.

Ibrahim Matola, Minister of Energy, commented: “MHSP is a top priority for our government as the least-cost option in meeting our growing energy demand and achieving our access targets. Once operational, this project will help drive long-term energy security and support lasting, inclusive economic growth. Energy access is fundamental to reducing poverty, fostering economic growth, and attracting private investment.”

MHSP was co-developed by the Government of Malawi and the International Finance Corporation (part of the World Bank Group) as a public-private partnership (PPP) with an expected overall cost of over US$1.5 billion including financing costs during construction. In September 2022, the Malawian Government selected a consortium consisting of Electricité de France (EDF) and SN Malawi BV (owned by British International Investment, Norfund, and Total Energies) as MHSP’s strategic sponsors using an international competitive tender process. The project’s financing is expected to consist of grants, equity contributions, loans, and guarantees from various development partners and private sector stakeholders. It will represent the largest foreign direct investment in Malawi’s history.

MHSP’s main and regulating dams on the Shire River will generate clean energy and store power to supply electricity during peak demand hours, helping to improve the reliability of Malawi’s national grid. The hydropower facility will also boost the grid’s capacity to support the growing demand of the country’s mining companies, an industry which holds significant potential to boost the country’s economic development prospects over the coming decade.

Nathan Belete, World Bank Division Director for Malawi, Tanzania, Zambia, and Zimbabwe, added: “This new hydropower project is a game-changer for Malawi, capable of catalysing transformative change in productive economic sectors such as mining, agri-business, and tourism. As the country works on driving its economic development agenda, this new source of clean and reliable energy will help drive business growth, create jobs, and improve the lives of millions of Malawians.”

MHSP is one of several large energy projects in Malawi supported by the World Bank Group, reflecting the institution’s commitment to supporting this sector as an important enabler of economic growth and development. Other important investments include the Emergency Power Restoration Project focused on rehabilitating the Kapichira power station, the Mozambique-Malawi Regional Interconnector Project, and the recently approved Accelerating Sustainable and Clean Energy Access Transformation (ASCENT) in Malawi project, aiming to improve last-mile electricity connections for the Malawian population.

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