CIC Energy, the Botswana Stock Exchange (BSE) listed energy outfit, is still hopeful of building its ambitious Mmamabula Energy Complex following Eskom’s signs it might still do business with Independent Power Producers (IPPs) from outside South Africa.
Africa’s largest economy is a big power guzzler and still needs large amounts of energy to fill its appetite for industrialisation, but there were concerns in some quarters as draft integrated resources plan (IRP2010) did not include long term electricity solution.
However, CIC Energy president punched the air after the company submitted a response to Request For Information (RFI) released by South Africa’s Department of Energy (DoE) and the National Treasury in relation to the planned 1,200 MW Mmamabula Energy Project.
The company President, Greg Kinross, is bullish Mmamabula can help meet South Africa’s energy shortfall.
“We are encouraged by the Government of South Africa’s renewed interest in purchasing power from independent power producers from within and outside of South Africa, which potentially could include the Mmamabula Energy Project,” Kinross said. “We anticipate further developments later this year as the RFI indicates that the DoE intends to issue a request for proposals for new power projects from developers within the next six months,” he added.
On March 5, 2012 the DoE and National Treasury publicly issued the RFI in relation to potential power projects based in South Africa and neighbouring countries.
The RFI was addressed to developers of coal-fired power stations, as well as co-generation facilities, gas-fired power plants and hydroelectrical plants.
The DoE have advised that they plan to use the responses to the RFI to evaluate the state of readiness of various projects able to supply electricity onto the South African grid prior to March 2019 and to then formulate a procurement process in relation to such projects.
“We continue to believe that, given its advanced stage of development and certain key contracts in place, such as the EPC contract with Shanghai Electric, the MEP can make a meaningful contribution towards the country’s urgent new capacity needs.”
CIC Energy has also re-initiated discussions with potential equity investors to participate as partners in the Mmamabula Energy Project.
The company has also completed private placement with Vitol Energy (Bermuda) Ltd, the largest independent energy trader in the world for a total of 5,263,158 common shares at a price of CDN$1.90 each for gross proceeds of CDN$10 million.
Vitol now holds 9.1 percent of the issued common shares of the company and CIC Energy has granted Vitol pre-emptive rights to maintain its proportionate shareholding interest in the company and certain anti-dilution rights for a maximum of 12 months, in each case, subject to the approval of the TSX.
In addition, an agreement has also been entered into whereby CIC Energy will utilize Vitol’s extensive coal marketing expertise.
The terms of this agreement give the Vitol Group the right to market 60 percent of any future export coal produced from the area in the Mmamabula Coal Field in Botswana covered by prospecting license 11/2004 (excluding the remainder of the area held by CIC Energy, being the area covered by retention license 2009/IR).
In January 2012, the Vitol Group announced the acquisition of a 35 percent interest in the company which holds the concession for the de Carvão da Matola Terminal at Maputo from Grindrod Limited (Grindrod).
