Morupule Coal Mine (MCM) is worried that should the government accede to proposal by the Ngwato Land Board to pay former cabinet minister Boyce Sebetela over P26 million, and six other farmers a combined P10 million, this could results in a bad compensation precedent set.
MCM believes that the move will make land acquisition for mining projects in the future very expensive and that it will have a negative impact on all land valuations for all subsequent mining projects.
The MCM sentiments forms part of a submission made to Cabinet recently by Minister of Mineral Resources, Green Technology and Energy Security, Advocate Sadique Kebonang in which he recommended that President Ian Khama makes a directive for a compulsory acquisition of a chunk of land eyed for a new open cast coal mine near Palapye.
MCM holds a mining licence over tribal land in Botswana, falling within the jurisdiction of the Ngwato Land Board where it intends to develop a new open cast mine which will supply an upcoming extension of Morupule B power station with coal.
As part of its efforts to acquire the targeted land from a certain group of farmers, Ngwato Land Board, which is also the custodian of the affected tribal land, is said to have conducted a new assessment in respect of compensation payable to the affected farmers.
Under the revised assessment, Sebetela tops the list with a revised figure of P26 230 million from the initial P12 428 million whilst other farmers are to be paid between P677 thousands and P2.2 million each.
The new figures suggested by the Ngwato Land Board were, however, rejected by MCM on grounds that it will serve as a deterrent for any future project as the land acquisition would make it cost prohibitive.
Sunday Standard has been informed that MCM, at a meeting held on March 16, 2017 requested the Permanent Secretary of the Land Management, Water and Sanitation, Thato Raphaka, to begin a compulsory process. However, it emerged that at the time, the Ministry of Land was of the opinion that further engagement with Ngwato Land Board would result in a “satisfactory outcome”.
Section 32 of the Tribal Act permits the Minister of Lands to compulsorily acquire land required for public purposes. Given what Kebonang termed as “importance of the project”, to meet the government projections of Botswana’s power requirements, the energy minister is said to have concluded that there was no need for further consultations with the affected farmers. MCM, on the other hand, is also believed to be considering a compulsory acquisition of the land as the only remaining solution which would permit the commencement of the planned open cast coal mine in time.
Meanwhile, MCM is said to be encountering difficulties to secure surface rights for the anticipated project. The open cast mine is expected to supply a total of 1.35 million tonnes of coal at 100 percent to the Independent Power Producer (IPP) per annum.
A financial close for the agreement between the Botswana Power Corporation and an unnamed Independent Power Producer (IPP) was expected to be by the of July 2017, the same time that MCM is expected to have secured surface rights to commence the project.
As per a detailed timeline of the project, the process of clearing the land as well as construction of access roads is expected to commence in October this year whilst the earthworks and infrastructure contractor is to commence operation on site by January 2018.
However, due to the delays brought up by MCM’s failure to secure surface rights, the project, including the financial close for the IPP transaction might not be achieved.
Sunday Standard has been informed that the lenders of the IPP could insist on proof of surface rights before financial close which will in turn delay commencement of the whole project.
Kebonang is said to be aware of the imminent delays to the project thus his recommendation for Cabinet intervention.
“The financial cost could therefore be monumental, as high as P194 million a month and further more there could be reputational damage caused by the project being late and over-run costs”, a source close to the matter quoted Kebonang.