The lender plans to provide debt and equity funding as well as risk guarantees and insurance for the $5 billion Mphanda Nkuwa plant on the Zambezi river and an associated $1.4 billion power transmission project, World Bank President Ajay Banga said in an interview in Mozambique.

“We want to be the hub of energy in our region, the Southern African Development Community,” Daniel Chapo, Mozambique’s president, told Bloomberg. He was referring to a bloc of 16 countries, many of which already import power from the southeast African country.

Southern Africa’s Biggest Reservoirs

Kariba and Cahora Bassa vie to be biggest generators of power

The 1,500 megawatt dam, which Banga said may be operational by about 2031, is one plank in a program backed by the World Bank known as Mission 300. The aim is to provide power connections to 300 million people in sub-Saharan Africa by 2030, significantly increasing access in a region where more than 80% of the world’s 680 million people without the energy source live.

Together with the African Development Bank, the International Monetary Fund and private sector investment, the program may see more than $100 billion of funding, Banga estimated.

Public, Private

Mphanda Nkuwa is being built by a consortium consisting of Electricite de France SA, TotalEnergies SE and Sumitomo Corp. The Mozambican government and its Hidroeléctrica de Cahora Bassa company will hold stakes.

The World Bank, through its International Finance Corp. unit, plans to provide some debt funding for the dam as well as take a stake in it. Its International Bank for Reconstruction and Development will likely offer risk guarantees, while its International Development Association will provide concessional financing for the 1,300 kilometers (808 miles) of transmission lines and its Multilateral Investment Guarantee Agency political risk insurance.

The transmission lines will be built with credit extended to the government.

Mphanda Nkuwa lies downstream of Cahora Bassa, which at 2,075 MW, was the last comparable hydro-project built in southern Africa. It was completed in 1974 during the dying days of Portugal’s colonial rule of Mozambique, which ended the following year.

To this day about 60% of its power flows directly to South Africa, a far more industrialized nation, through purpose built lines, reflecting its colonial model.

Mphanda Nkuwa will have transmission lines connecting it to a southern grid, one of three isolated grids in Mozambique, so that it can supply the region including the capital of Maputo. It will also be able to sell excess power to nearby countries such as Zambia, Malawi and Zimbabwe.

A new design being finalized will reduce its reservoir size to a tiny fraction of that of Cahora Bassa, which covers almost 3,000 square kilometers (1,158 square miles) and Kariba, a reservoir further upstream on the Zambezi, located on the border between Zambia and Zimbabwe. At more than 5,000 square kilometers Kariba has the largest volume in the world of any man-made water-body. The intention is to reduce Mphanda Nkuwa’s impact on communities and the environment.

It’s the first step in what both Banga and Chapo described as a five-to-10 year plan to boost electricity production by adding smaller power plants of 400 MW and 200 MW upstream, expanding Cahora Bassa by more than 50% and developing a 400 megawatt solar plant close by. Support for some of that may be included in a new five-year country partnership framework that the World Bank is working on for Mozambique.

The intention, in addition to boosting power export revenue from the $240 million attained last year, is to spur local processing of minerals mined in Mozambique such as graphite and beryllium, and accelerate the rollout of electricity connections to citizens. Of the country’s 33 million people, 64% are now connected to electricity, about twice as many as in 2018.

The World Bank’s backing for the project comes as Mozambique struggles to recover from the shock to investor confidence last year after hundreds of people died in violence following disputed elections.

With a median age of about 18 the country, which has been ruled by Chapo’s Frelimo party since independence, is also struggling with youth unemployment and a separate Jihadist insurgency in the far north that has slowed $57 billion of liquefied natural gas projects. If implemented, those could transform the economy of one of the world’s poorest nations.

“Working with instability and trying to find a way to help them become stable and developed is what our task is,” Banga said. “If a country was stable, they would probably not need us.”