Sunday, April 21, 2024

Parley greenlights BPC P1.7 billion loan guarantee 

Parliament has granted approval for the Botswana Power Corporation (BPC) to seek funding from local financial institutions, facilitating the payment of outstanding balances totaling up to one billion Pula. Finance Minister Peggy Serame presented the bill, emphasizing the necessity to ensure BPC’s financial sustainability.

“I beg to present to this Honourable House, a request to extend a Government Guarantee amounting to P1.722 billion to Botswana Power Corporation (BPC),” said Serame, citing Section 22(1) subsection (2) of the PFM Act No.17 of 2011.

Serame outlined the purpose of the funding, which includes settling overdue balances with major suppliers, procuring spare parts for the Morupule B 600 Megawatts (MW) power station, and funding for additional power generation projects. Serame stressed that BPC’s mandate revolves around the generation, transmission, supply, and distribution of electricity in Botswana, in accordance with the BPC Act and Electricity Supply Act.

The proposed funding aligns with BPC’s “Maduo Twenty-Six” strategy, aimed at achieving financial sustainability, enhancing asset management, establishing project execution capabilities, increasing generation capacity, and integrating renewables into the energy mix. Serame highlighted BPC’s ongoing financial challenges, necessitating various forms of government support.

Serame emphasized that the requested Government Guarantee complies with debt legislation, ensuring that the country’s public debt exposure remains within the statutory limit of 40 percent of GDP. Currently, Botswana’s total public debt, including guarantees, stands at 20.59 percent of GDP, well below the legal threshold.

In terms of the proposed debt structure, the P1.722 billion facility comprises long-term debt and revolving debt facilities. The financing package aims to secure funding from both private and state-owned financial institutions, with varying interest rates and tenures.

Serame concluded by affirming that the requested Government Guarantee will enable BPC to fulfill its debt service obligations while progressing towards securing new generation capacity. The proposed projects include a 300 MW base load from the Jindal project and solar photovoltaic generation, aimed at reducing reliance on high-cost electricity imports and emergency diesel generation.

Despite ongoing efforts, Botswana continues to grapple with meeting its local power demand, necessitating reliance on imports to supplement domestic generation. 

Minister responsible for energy, Lefoko Moagi recently acknowledged the strides made in bolstering local generation capacity. 

“The government remains steadfast in implementing the Integrated Resource Plan (IRP) for Electricity Generation,” Minister Moagi asserted. “We are actively pursuing power generation and transmission projects to ensure the country have a sufficient, secure, and reliable electricity supply.”

In a bid to diversify the energy mix and enhance resilience, the government has appointed Jindal Energy Botswana (Pty) Ltd (JEB) as an Independent Power Producer (IPP) to develop a 300MW Net Coal Fired Power Plant. This initiative will entail supplying electricity to BPC through a Power Purchase Agreement (PPA) spanning 30 years.

Simultaneously, efforts are underway to advance the development of a 200MW Concentrated Solar – Thermal Power (CSP) Plant in proximity to Maun. The tender for the project, initially floated in June 2023, is set to close in March 2024 following a three-month extension, signaling the government’s proactive stance towards embracing renewable energy sources.


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