viewNcondezi Energy Ltd

Ncondezi Energy aims to fill power gap in Mozambique


  • Developing 300Mw power station in northern Mozambique
  • Entered commercial and industrial off-grid power sector
  • First solar/battery project due to come online in H1 2020

Quick facts: Ncondezi Energy Ltd

Price: 4.55 GBX

Market: AIM
Market Cap: £15.91 m

What it owns


The project is in the heart of Tete, Mozambique’s most rapidly industrialising region and a hub for power generation.

Total capital expenditure is expected to be US$1.1bn and once completed it will be one of the largest generation plants in the country.

In July 2019, a joint development agreement was signed with Chinese firm CMEC and US group General Electric.

Ncondezi Energy (LON:NCCL) will look to retain a 40% equity stake in the project.

On the share register are the African Finance Corporation, a specialist Africa infrastructure fund, and Polenergia that together hold approximately 30% of the company’s issued shares.

Solar Power

Separately, Ncondezi has a joint venture deal with GridX Africa Development with a view to building captive solar and battery storage solutions for commercial and industrial use.

GridX has 15 solar and battery storage projects, of which six are at an advanced stage.


How it is doing

In January, Ncondezi submitted an updated financial model for a 300MW coal-fired power station to its partners for review.

In March it submitted a firm tariff proposal to the Mozambican Government and state-owned Electricidade de Moçambique (EDM), the last milestone to start formal tariff negotiations with EDM, which will be completed in the second quarter.

In August, it submitted the Transmission Integration Study for the project to Electricidad de Moçambique, following the updated tariff proposal.

Final results for 2019 showed the year closed with US$722,000 in the bank after US$769,000 was booked in joint venture investment expenditure during the financial year and US$58,000 spent on power development.

The coffers were topped up with a £650,000 capital raise in May.


What the boss says: Hanno Pengilly, chief executive

"It's a fantastic step forward that we have submitted the final draft of the Transmission Integration Study to EDM for review,” said chief executive Hanno Pengilly in August.

“Following the updated tariff proposal in March 2020 this report was required and has been updated with proprietary information from EDM.

“The results look encouraging and have identified a number of optimisations which have the potential to improve transmission line cost, strengthen the grid and facilitate future transmission expansion plans. Tariff negotiations are continuing in parallel and are progressing positively," he added.




Inflexion points

  • Finances for Ncondezi agreed and put in place
  • Permits agreed and construction gets underway in Mozambique
  • Expansion of GridX solar project
  • JDA timetable for Ncondezi


What the analysts say

Analyst at broker Canaccord Genuity said Ncondezi’s future lies beyond its current development of a thermal power station in Mozambique and in off-grid solar generation.

The broker, which initiated coverage in May with a ‘speculative buy’ rating and 13p price target on the shares, said that the short-term picture will be dominated by the 300Mw power project in Tete.

“The cost of solar is already highly attractive compared to off-grid diesel power, and with this cost expected to keep falling sharply we see customers moving increasingly to onsite off-grid generation,” the broker said.

There is sufficient coal in Ncondezi’s licence for a series of similar power stations, adds Canaccord, with export potential as well as Mozambique’s neighbours also chronically short of power but the plan is to build a 300 MW plant, supplied by 1.5mln tons of coal annually.

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