Thursday, April 9, 2020

Mmamabula energy project to lure foreign investment

The impeding construction of the Mmamabula energy project is expected to amass private entities from power station investors inside and outside the country, equipment manufacturers to financial institutions through project financing.

Briefing parliament about the electricity supply bill which was read for the second time, Minerals, Energy and Water Resources minister, Ponatshego Kedikilwe, said the existence of surplus electrical power in the SADC region coupled with high unit costs for the sparsely populated Botswana and high transport costs have hitherto conspired against either Botswana developing the export power station or exporting the raw coal outside the region.

But with the current surplus power almost already exhausted in the region and world wide, the prices of commodities including those of coal have been rising.

“It is on this background that the government of the republics of Botswana and South Africa together with the private sector (Independent Power Producers) and financial institutions (or lenders) have joined hands to develop the power station in the Mmamabula coal area. The Mmamabula power station will be developed in two phases of 2400 MW and scheduled for commissioning and provision of power by the end of 2012, a period when power shortage will be at its peak”, said minister Kedikilwe.

In the recent past, the country has been experiencing electricity blackouts because of insufficient supply of energy, particularly from power generating Southern Africa. The region has been under repeated power cuts, largely attributed to South African supply, which contributed 90 percent of regional demand.

Most of the energy is imported from South Africa.

The imminent construction of Mmamabula, therefore, is the answer not only to Botswana but to the entire SADC region particularly South Africa which is believed could be a great consumer of Botswana generated energy owing to the dwindling power supply currently gripping the country.

Contributing to the Bill, Members of Parliament expressed their concern over government insensitivity regarding citizen economic empowerment, with MP for Gaborone South, Akanyang Magama, pleading with the government to assist Batswana to benefit from the Mmamabula energy project.

“The government should shed the idea of giving priority to foreigners and assist in the empowerment of the citizens,” Magama pleaded.

Taking the cue, Kgalagadi West MP, Mephato Reatile, implored the government for the Mmamabula project, saying it will not only add to employment creation but will also contribute to the development of the country and the entire region.

Minister Kedikilwe told parliament that the amendment of the electricity Act was necessary to provide a conducive environment for IPP participation in Botswana’s electricity power industry and to allow for the licensing of IPPs.
This, he said, would empower certain organizations, such as Mmamabubula and MMamantswe projects to connect into the national grids without developing their own. It will also connect them to the 12 regional power hungry members of SAPP.
Further, he said the objective of the bill was to provide for the amendment of certain provisions in the Electricity Supply Act by updating it as well as providing for new areas which were not provided for, in particular the licencing of IPPs and involvement of other private entities in the power supply industry.

“The electricity supply bill also deals with modifications, transfers, suspension and cancellation of licences. It is important to note that since the project will be implemented through project financing, there are various stakeholders, project investors, power-buyers and lenders who all have various needs for managing risks. We have, therefore, benchmarked with other jurisdictions where IPPs operate such as Australia, UK, USA, Asia, Middle East and even some African states to see the kind of regulatory requirements for IPP,” Kedikilwe asserted.

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