MBABANE - The Eswatini Electricity Company continues to work around the clock to increase local electricity generation and be a vital player in the country’s economic growth through job creation and investment.

The company has (on Tuesday 30th May 2023) 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.

Agreement

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.

About the Lower Maguduza Hydro Power Station:

• It will be the first limited recourse project finance infrastructure project in Eswatini
• It will be the first utility scale power generation using private investment for public consumption (via EEC) in Eswatini.
• It will improve electricity supply security in Eswatini – an increase in local generation of some 64GWh per annum (a 20% increase)
• It will reduce the Eswatini carbon footprint by replacing imported electricity that involves the burning of coal and thus avoiding the associated release into the atmosphere of CO2 per annum;
• It will improve circulation within the Eswatini economy, plus the associated multiplier effects of purchases by EEC from a Eswatini registered companies as opposed to paying for imports from neighboring countries.
• It will stimulate the local construction market via the award to contractors that will include Eswatini company participation of over 25%
• It will provide local employment and services contracts to Eswatini service providers throughout the 25-year PPA.
• It will hand-over a working asset worth approximately E1bn to EEC for no consideration at the end of the PPA, with an expected further 25-year life.

The equipment, which comprise of a tractor, plough, planter and trailer were presented to Lavumisa Chief Gasa WaNgwane by the newly appointed EEC Board Chairman Dr. Phil Mnisi on Tuesday.

Dr. Mnisi, who was accompanied by other EEC Board Members, inclusive of Her Royal Highness Princess Sibahle, expressed appreciation to Chief Gasa WaNgwane for allocating the power utility land for the construction of the power station.

“When we came to Lavumisa requesting for land for this project, we received a warm welcome from the Chief and the entire community. It is worth noting that EEC cannot achieve its mandate without support from the communities from which it conducts its business, which is why we are grateful for this kind gesture,” Mnisi said.

EEC has constructed a 10MW Solar Photo Voltaic (PV) Plant in Lavumisa at Qomintaba, which is positioned to respond to Eswatini’s Sustainable Energy for All (SE4ALL) initiative that aims at increasing renewable energy generation in the national energy mix to 50% by the year 2030. The project’s objective is to increase sovereignty security of supply to reduce reliance on electricity imports to meet the country’s energy needs.

The EEC Chairman expressed his appreciation to the Lavumisa community for supporting EEC during the inception of the project.

 “We have received tremendous support, not only from the authorities of the area, but even from the communities that are affected by this project. In some instance it was difficult, but we worked together for a better solution,” Mnisi said while receiving ululations from NCP representatives who were present for the donation.

Chief Gasa WaNgwane appreciated the presence of Princess Sibahle and congratulated her appointment into the EEC Board, together with the rest of the new board members. He stated that EEC’s donation was better positioned to support the vulnerable children considering that it included all the required items for subsistence farming.

“Our area is affected by drought, but of late we see developments that have brought water projects, and now we are seeing electricity projects. We have no doubt that the lives of our community members, especially the children from our NCPs, will now have food to eat,” he said.

Member of Parliament Honourable Bomber Mamba also extended his appreciation to EEC, indicating that the farm equipment will benefit NCPs from Somntongo, Sigwe and Matsanjeni who are under the Lavumisa constituency. He pledged commitment that the equipment will be well-taken care off and used for its intended purpose.