The Mozambique government has approved the first construction phase of the Mphanda Nkuwa hydroelectric dam in the western Tete province, and is now in the process of finalising the contract.

The government predicts that work will begin on the dam by the end of 2011 and will take between five and six years. The scheme will cost US $2 billion and is being financed largely with a loan from China Exim Bank. In addition it is backed by a consortium including publicly owned electricity company Electricidade de Mocambique (EDM), the Brazilian company Camargo Correa, and the Mozambique company Energia Capital which will provide 30 per cent capital investment.

Located 70 km from Tete city, the dam will be constructed on the Zambezi river about 60 km downstream from the Cahora Bassa dam. Phase one involves the installation of four turbines, which will generate a combined 1,500 megawatts of electricity. The dam wall will be 700 metres long and 90 metres high, with 13 discharge floodgates, and the lake created by the dam's construction will cover 97sq kms.

The government has stated that the majority of the electricity generated will be for national consumption while the surplus will be exported, possibly to South Africa.

Environmental groups have opposed the dam, arguing that in addition to displacing 260 local families, the impact of the Cahora Bassa dam coupled with the Mphanda Nkuwa dam will cause serious problems further down the Zambezi river. Supporters claim that the re-located families will have greater access to health care and education.