The European Investment Bank (EIB), the European Union's long-term lending Institution, is providing loan facilities totalling EUR 46 million (1) to Mozambique Transmission Company (Motraco) for the construction of two overhead transmission lines and related substations to provide a reliable supply of electric power from the South African grid to the Mozambique and Swaziland power grids.
Motraco is a new regional joint-venture company established in Mozambique to implement, own and operate the project. Motraco is owned (one-third each) by the national power utility companies of the three countries concerned: Eskom (South Africa), Swaziland Electricity Board (SEB) and Electricidade de Moçambique (EdM).
Funding by the EIB includes:
The new transmission lines, single circuit, 400 kV, will link the South African power grid with Maputo. The main purpose of the project is to supply the MOZAL aluminium smelter under construction near Maputo in Mozambique, with a reliable electrical power supply. In addition, the project will provide electrical power to Mozambique's southern electricity grid serving the Maputo region, and, as one of the two lines will cross Swaziland, the project will provide major re-inforcement of the transmission infrastructure for the supply of electrical power to SEB.
The EIB, established in 1958 by the Treaty of Rome, finances capital investment projects which further the European Union (EU) policy objectives. It also participates in the implementation of the EU's co-operation policy towards third countries that have co-operation or association agreements with the Union. Financing in Mozambique and Swaziland is done under the provisions of the Fourth Lomé Convention, which was concluded in 1989 for a period of 10 years and is accompanied by two Financial Protocols, spanning 1991-1995 and 1996-2000. Financing in the Republic of South Africa is done under a separate mandate.
(1) On 15.06.99, 1 Euro = 1.07420 USD.
(2) The Bank's own resources are funds raised on the international capital markets. Besides, the EIB manages under mandate part of the European Development Fund (EDF), financed by EU Member States; these funds are used primarily for risk capital operations.