The African Development Bank (AfDB) has approved a grant of $22.9m for the rehabilitation of Malawi’s Kapichira and Nkula B hydropower plants.
The $118.7m initiative, with co-financing opportunities, will rehabilitate the 64-MW Kapichira I Hydropower plant, located in Chikwawa District as well as the 100MW Nkula B Hydropower station.
The Nkula B Hydropower station is Malawi’s oldest major hydropower station, built in 1966. It currently supplies approximately half of Malawi’s electricity even while operating significantly below capacity due to ageing infrastructure and recent cyclone damage.
The African Development Bank’s country manager for Malawi, Macmillan Anyanwu, said the project represents a cornerstone investment in Malawi’s economic transformation.
“By restoring these hydropower plants to optimal performance, we are not just fixing infrastructure. We are unlocking economic potential, creating jobs, and bringing reliable electricity to communities that have struggled with chronic power shortages.”
The rehabilitation will increase Malawi’s annual energy generation by 55% from 916 gigawatt-hour (GWh) to 1,426 GWh, while extending the operational life of the ageing facilities from 22 years to 47 years. The plant’s performance is expected to improve from 80% to 95%, virtually eliminating the forced outages that have plagued Malawi’s electricity supply.
The grant funds will come from the African Development Fund (ADF) and the state-owned Electricity Generation Company Limited (EGENCO) will serve as the executing agency, with implementation scheduled from March 2026 to December 2030.
Malawi faces widespread energy shortages with just 25.9% of the population having access to electricity. The situation deteriorated further in 2022 after Tropical Storm Ana severely damaged the Kapichira plant, which accounts for 30% of the country’s generating capacity.
The rehabilitation project positions Malawi to generate more energy for its economy that depends on it.
Meanwhile, the AfDB is moving ahead with the introduction of a new carbon credit facility to advance carbon markets and unlock climate finance.
The Africa Carbon Support Facility will assist governments in developing key policies and regulations for carbon trading, as well as focus on stimulating both the supply and demand for carbon credits while building the necessary market infrastructure to increase their usage.