Sumitomo Corp. will become the first Japanese company to build a thermal power plant in Mozambique and soon start work on one in neighboring Tanzania, expanding its power generation business in Africa.

The trading house will partner with heavy industry group IHI on the roughly 17 billion yen ($149 million) order from Mozambique’s state-run electric utility for a natural-gas-fired plant to be built near the capital Maputo. Construction is to begin soon, with a summer 2018 target for completion.

The 110,000kW facility is expected to satisfy about a fifth of the country’s demand for electricity. It marks the first sub-Saharan power plant project for IHI, which will supply the generating equipment.

The Tanzanian project, worth an estimated $308 million, is for a 240,000kW gas-fired plant, the biggest in the country. To be built near Dar es Salaam, it is slated for completion in fiscal 2018.

Hydropower provides the main source of electricity in both countries. But as their economies have grown, power shortages have become an obstacle. Sumitomo will build each country’s first combined-cycle power plant, which captures the heat wasted by a gas turbine to run a steam turbine, providing additional output. These plants are said to be 50% more efficient than conventional coal-fired power stations.

Sumitomo is already building a combined-cycle plant in Ghana and operates a wind farm in South Africa. Among other Japanese trading houses, Marubeni has built a fossil-fuel power plant in Nigeria, while Mitsui & Co. is involved in a project to build and operate a coal-fired plant in Morocco.

The United Nations projects Africa’s population will increase by 40% from 2015 to 2030, outstripping growth of 12% in Asia and 11% in North America. Africa’s need for power plants is thus likely to rise relatively faster. Competition for this business is also becoming energized, with Siemens and General Electric, not to mention Chinese companies, jumping into the fray.

Source: Nikkei