International Power looks set to play a key role in Botswana’s Mmamabula energy project after signing a project development agreement with CIC Energy Corp.
If further negotiations on a definitive project agreement are successful, the UK-based international project development company could become a 35 per cent equity partner in the 1200 MW power plant and integrated coal mine project and would also be responsible for operating and maintaining the power plant.
The Mmamabula energy project is part of the proposed Mmamabula Energy Complex, a project that could help Botswana to realise the value of its energy resources as well as provide electricity for economic development. It is thought to be the largest private sector project being developed in Africa, and consists of a coal-to-hydrocarbons project, an export coal operation as well as the $3 billion power plant and coal mine complex.
Its developer, CIC Energy, has already appointed China’s Shanghai Electric Group Co. Ltd as the EPC contractor for the power project and in late 2008 named the UK’s Parsons Brinkerhoff as owner’s engineer.
The power project was dealt a blow recently, however, when CIC announced that South African utility Eskom would not commit to the long-term offtake of power from Mmamabula until its long-term funding model has been agreed with South Africa’s regulator Nersa.
“We are hopeful that the discussions between the government of South Africa and Eskom to establish a sustainable funding model will soon be finalized in light of the urgent need for private sector electricity providers to complement Eskom’s new build programme,” said Greg Kinross, President of CIC Energy. “This is especially relevant for the Mmamabula Energy Project because all other project development and financing activities are progressing very well.”
CIC Energy says that it remains confident of sealing a power purchase agreement with Eskom in the future. “We do not believe that any of the project fundamentals and compelling advantages of the Mmamabula Energy Project have changed as a result of this development other than the additional time that is likely to be required to reach conclusion, which we are currently evaluating,” said Kinross.
The Mmamabula power plant will consist of two 660 MW supercritical units equipped with dry cooling technology to conserve water and flue gas desulphurization (FGD) to capture sulphur. The project will comply with the Equator Principles – guidelines based on the environmental and social standards set by the International Finance Corporation.
CIC Energy is also aiming to seal a power purchase agreement with Botswana Power Corporation.
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