CIC makes Mmamabula appointments

3 December 2008

Development of a key energy project in southern Africa is moving forward with the appointment of an owner’s engineer and engineering, procurement and construction (EPC) contract by CIC Energy.

CIC Energy Corp., developer of the Mmamabula energy project in Botswana, has announced that Shanghai Electric Group Co. Ltd (SEC) has been selected as the preferred EPC contractor for construction of a 1320 MW power plant at the Mmamabula coalfield. It has also made UK-based consultants Parsons Brinckerhoff its owner’s engineer for the project.

The Mmamabula energy project is thought to be the largest private sector project being developed in Africa, and will consist of a power station and integrated coal mine as well as a coal-to-hydrocarbons (CTH) project and export coal operation. The power plant and mine project alone will require an investment of around $3 billion, says CIC.

CIC Energy says that it is aiming to conclude definitive terms for the fixed-price, lump-sum turnkey contract with SEC early in 2009. Parsons Brinckerhoff will assist with detailed evaluation of SEC’s bid package as well as with the finalization of technical specifications for the EPC contract.

Parson’s Brinckerhoff’s appointment is initially up to financial close, with an expected extension to include the construction phase of the power plant.

The Mmamabula power plant will consist of two 660 MW supercritical units equipped with dry cooling technology to conserve water and flue gas desulphurisation (FGD) to capture sulphur dioxide and trioxide. The project will comply with the Equator Principles – guidelines based on the environmental and social standards set by the International Finance Corporation.

“SEC is perhaps the largest power station manufacturer in the world and SEC’s participation in this project is a major asset to the [Mmamabula project],” said Greg Kinross, President of CIC Energy. “The execution of the preliminary agreement with SEC as the preferred EPC contractor … positions us very well for an anticipated start of construction in 2009, which is one of the MEP’s compelling advantages.”

The finalisation of the EPC contract for the project is key to concluding agreements with electricity offtakers, lenders and others, says CIC, which hopes to conclude financial arrangements by mid-2009. Commercial operation of the power station is expected in late 2012 or early 2013.

CIC Energy is aiming to agree power purchase agreements with Botswana Power Corporation and South African utility Eskom for the sale of electricity from the project. The Toronto Stock Exchange-listed firm is also planning a CTH project to convert some of the coal to fuels and petrochemicals, starting in 2014.

The final element of the energy complex is the export of A-grade thermal coal from Mmamabula to international markets by sea.

SEC is CIC Energy’s contractor of choice largely because of its size and its ability to manufacture all of the key components needed for the power plant project. In 2007, the Chinese company manufactured 30 GW of power plant capacity.

If Parsons Brinckerhoff’s contract is extended to the construction phase, it will assist CIC Energy with project management, design review, supervision and coordination as well as the engineering, construction, inspection, testing and commissioning of the power station and other project elements.

“As one of the leading engineering consultancies in the world, PB brings technical and project management expertise, including in-depth understanding of Chinese power plant equipment and construction, that will assure the Mmamabula Energy Project is built on time and on budget,” said Kinross.

Gavin Young, Managing Director for PB’s African operation said: “Parsons Brinckerhoff has strong ties with Africa, having worked on projects there since the early part of the 20th century. We are delighted to continue our association via the Mmamabula energy project, which promises to provide significant new baseload power generation capacity for Southern Africa.”

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