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South African Utility Firm Eskom to Reduce Energy Supply to Botswana

July 31, 2008

Text of report by Botswana newspaper Mmegi website on 30 July

[Unattributed report: "End of Botswana deal will give Eskom's SA users a breather"]

Eskom will have more power to supply local users until 2012 after it cuts back power to Botswana as part of a six-year bilateral agreement with the Botswana Power Corporation (BPC).

Last year Eskom entered into a pact with the BPC, under which Eskom will reduce its energy supply to Botswana from 410 megawatts last year to 150MW by 2012. Andrew Etzinger, Eskom’s spokesperson, said last week that the agreement would end in 2012. But this is “not to say that it will not be renewed … Certainly, at this stage, that’s what the agreement is.” Tlhomaniso Selato, a BPC spokesperson, was not able to comment on the agreement.

Meanwhile, CIC Energy plans to supply power from the first 2,500MW phase of the Mmamabula station from early 2013, with full output expected in 2014. The first phase will cost 10bn dollars (75bn rand).

In April CIC Energy said it planned to spend as much as 28.5billion to build a Botswana coal complex to produce energy, mainly for sale to Eskom, as well as fuel from coal, and coal for export. CIC Energy had planned to sell to Eskom most of the power it produced at Mmamabula. However, no deal has been announced yet. In April CIC said it had spent 80m dollars on the bankable feasibility study for the plant’s first 2,500MW phase CIC has also revised the schedule of the mega-project, by about six months, owing to the strong demand for power plants and prevailing engineering resource constraints, which continue to increase lead times for power plant equipment and construction services.

Financial close for the first phase of the project is now expected in the fourth quarter of 2008, followed immediately with the start of construction in the same quarter.

This would push commercial operation of the first unit of the power station to late 2012, or early 2013. The second and third units would come on-line at six-month intervals following the first unit.

New legislation in Botswana to facilitate the project has received approval from the Government of Botswana cabinet, and passed the third and final Parliamentary reading.

These bills to amend the country’s Mines and Minerals Act and Electricity Supply Act will become law following Presidential approval and gazetting. CIC Energy also reported that the announcement of the selection of the engineering, procurement and construction (EPC) contractor for the Mmamabula Energy Project would take place “shortly”.

The conclusion of the definitive EPC contract, and the signing of the power purchase agreements, which were ongoing with Eskom and the Botswana Power Corporation, would signal the finalization of the bankable feasibility study, as all the technical components of the study are complete. Eight diamond drill rigs were actively exploring in the coalfield, and by the end of December 2007 the company had drilled over 1 800 diamond drill holes, and was targeting the release of a mineral resource estimate update in mid-2008.

The company also indicated that a programme of 10 large diameter boreholes was started, to obtain samples of sufficient mass for advanced physical and chemical analysis, results of which would then be used in the design of the power station boilers.

In addition to the 7,5 m/t to 9,0 m/t a year coal mine, and the 2,100 MW to 2,460 MW power plant, CIC Energy was also advancing on its plans to investigate the export of coal from Mmamabula, as well as its coal-to-hydrocarbons (CTH) project, which intends producing synthesis gas (syngas) which could be converted into petrochemicals, gas and fuels.

Originally published by Mmegi website. Gaborone, in English 30 Jul 08.

(c) 2008 BBC Monitoring Africa. Provided by ProQuest Information and Learning. All rights Reserved.




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