Edenville Energy (LON:EDL) could soon find themselves subject to takeover by one of the large Asian corporations that are currently investing billions in to Tanzania.The company revealed in late 2013 that there are plans in place to construct a 100 megawatt coal fired power station at its Tanzania based Rukwa coal project,and that new plant will supply energy directly to the country's new power grid.The Tanzania government has also confirmed the building of a new Western power line between Mbeya and Sumbawanga,on a route that passes close to the Rukwa coal project.This new power line has been planned for some time but has now been rapidly brought forward and is expected to be in full operation by 2016. The government aims to increase installed generation capacity to 2,780 MW by 2015, up from its current 1,438 MW ,and supply an additional four million people with access to electricity.
As a result of these decisions Edenville Energy have suddenly found themselves sitting in a location hotspot of potential long term investment,notably much of that investment is coming from China who are now the largest single foreign investor in Tanzania.In the last few years Chinese investment in to the country has more than doubled year on year,and has jumped from $700 million in 2011 to $2.1 billion in 2013,and is forecast to double again in 2014 and 2015.
In terms of economics a 100MW plant could realise revenues of around $7m per month or $84m per annum,and over the projected 30 year plant life this amounts to over $2.5 billion dollars.To put those figures in to context with Edenvilles current market cap of just over £4m there are some serious upside numbers clearly visible.And although Edenville are planning to bring in joint venture partners to help develop this project,the size and scale of the projected revenues could be too tempting for one of those potential suitors not to miss.There is an added attraction to the location of the new proposed 100 MW plant,which is the ability to export excess energy in to neighbouring Zambia.
