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The World Bank has approved a $350 million grant for the Mpatamanga Hydropower Storage Project (MHSP) aimed at doubling the country’s electricity generation capacity and connecting over one million new households to the national grid.
The country’s largest energy investment to date, is expected to generate 1 544 gigawatt-hours of clean energy annually once operational in January 2031.
Raad: The government must restore fiscal and foreign exchange
Beyond expanding access, it will stabilise power supply during peak demand and allow Malawi to export electricity through the Southern African Power Pool, with annual foreign exchange earnings projected at $50 million.
World Bank Country Manager for Malawi Firas Raad said the project could raise Malawi’s GDP growth by 1.2 percentage points annually—up to five percentage points if expansion in the mining sector is realised.
“The project is projected to reduce national poverty from 51 percent to 25 percent by 2050, ten percentage points faster than in a scenario without the project,” he said.
In addition to its long-term impact, MHSP is expected to create approximately 4 000 direct jobs during construction in Chikwawa, with thousands more to emerge indirectly as improved power supply drives industrial activity and small and medium enterprises growth.
Has described MHSP is a top priority: Matola
The energy boost is seen as critical to unlocking stalled mining ventures and enhancing manufacturing and agro-processing.
However, the project’s full rollout hinges on macroeconomic stability and investor confidence. The World Bank has linked continued support to policy reforms such as allowing the Electricity Supply Commission of Malawi (Escom) to transact in United States dollars and easing the 30 percent foreign exchange surrender requirement to attract private capital.
“The government must restore fiscal and foreign exchange stability to keep this project on track,” Raad cautioned.
The facility will be implemented under a public-private partnership through Mpatamanga Hydropower Limited, a special purpose vehicle jointly owned by Electricité de France (EDF), SN Power Malawi BV—a firm backed by British International Investment, Norfund and TotalEnergies—and the International Finance Corporation (IFC). The Government of Malawi will hold a 30 percent minority stake financed through the IDA grant.
Minister of Energy Ibrahim Matola described MHSP as a top priority, calling it the least-cost solution for meeting rising demand.
“Once operational, this project will help drive long-term energy security and support lasting, inclusive economic growth. Energy access is fundamental to reducing poverty, fostering economic growth, and attracting private investment,” he said.
The plant will comprise main and regulating dams on the Shire River, designed to store power for high-demand periods and support regional trade in electricity. A second phase of financing is expected after July 2025, with financial close targeted for early 2026.
Raad said the PPP model “enables the government to benefit without direct budgetary expenditure, while supporting large-scale private investment.”
Commenting on the development, energy expert Kandi Padambo said any increase in the country’s generation capacity is a welcome development.
However, he observed all sectors including mining, tourism, agriculture as well as the manufacturing have been begging for energy for far too long.
“But we should not be naive to only look at one side of the coin. You describe the $350 million as a grant. I do not know if that is correct. But conceded it is a grant, are there any conditions precedent?
“What are the long term implications for the development of our power sector in particular and the country in general? These are questions we should ask but usually do not. Answers to such questions allow for a more comprehensive evaluation of our national projects,” said Padambo, former Escom chief executive officer.
On his part, Chamber of Mines and Energy national coordinator Grain Malunga observed in a brief interview that when constructed, the project will boost energy needs and for some time improve energy reliance for the mining sector.
“Still more efforts are required to supply more for value addition and industrialisation,” said the mining expert and former minister of Energy and Mining.
MHSP is part of a broader World Bank-supported energy programme that includes the Kapichira rehabilitation, the Mozambique–Malawi interconnector, and the Ascent initiative aimed at expanding last-mile grid connections across rural Malawi.
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