The World Bank is to provide up to $65 million to finance state utility Electricidade de Moçambique’s (EDM) participation in the Temane Thermal Power Plant (CTT) project in Inhambane province. The funding forms part of a broader package of measures approved by the Mozambican government to resume and complete construction of the facility, which also includes reductions in concession fees, a two-year extension of the contract term, and other financial incentives.

The package, formally titled the Support Measures for the Recovery of the Temane Thermal Power Plant Project, was approved by the Council of Ministers and enacted through Resolution No. 88/2026 of 4 November. According to the government, the measures are designed to overcome significant construction delays at a facility classified as infrastructure of national economic and strategic importance.

The CTT will generate electricity from natural gas reserves in Inhambane, with EDM holding a shareholding position in the project. The resolution states that construction works were affected by ‘significant delays resulting from force majeure events, namely Cyclone Freddy and Tropical Storm Filipo, as well as the abandonment of works by the contractor.’

To enable completion of the project, the government approved the ‘mobilisation of financing from the World Bank to secure EDM’s capital contribution of up to $65 million.’ The funds are intended to cover the state utility’s equity obligations as a shareholder in the project.

Beyond the financing arrangement, the recovery package provides for an extension of the concession period from 28 to 30 years. The change results from the granting of an additional six months on top of the 18 months originally allocated under the Tolling Agreement — the contract governing the terms under which the plant will be used to generate electricity — in recognition of delays caused by the force majeure events.

On the financial side, the government approved a reduction in concession fees from 3% to 2% during the debt amortisation period, and from 8% to 5% after debt maturity through to the end of the concession. An 11.1% adjustment to the Capital Recovery Rate component was also authorised to strengthen the project’s economic and financial viability.

The package further includes a ‘temporary waiver of dividends up to a value of $39 million’, with payments to EDM to resume once that threshold is exceeded. A waiver of the right to claim compensation for construction delays, up to an approximate value of $10.8 million, is also included.

Despite the measures approved, their effective implementation is contingent on the negotiation of additional agreements and the establishment of guarantees to protect the interests of EDM and consumers. Among the conditions set out is the application of any extraordinary project gains — including those arising from the performance guarantee of contractor TSK, currently the subject of legal proceedings — towards reducing future tariffs. The package also provides for the exemption or cancellation of any default interest under the commercial agreement, within the limit corresponding to the additional contribution of the adjusted tariff during the commercial operation period.

A further condition requires a review of the construction management agreement concluded with the CTT, with the aim of strengthening EDM’s role in the management, monitoring, and decision-making over construction works. The measure is intended to ensure closer oversight of project execution and reduce the risk of further delays in the completion of the plant.