Mmegi Online :: Two more buyers eye Morupule B
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Last Updated
Tuesday 21 February 2017, 15:35 pm.
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Two more buyers eye Morupule B

The Botswana Power Corporation (BPC) expects to receive an offer for its 600MW Morupule B power station on February 8, 2017 from China Machinery Engineering Corporation (CMEC) and thereafter negotiations will begin.
By Brian Benza Wed 25 Jan 2017, 18:00 pm (GMT +2)
Mmegi Online :: Two more buyers eye Morupule B








But in the event that negotiations do not succeed, CEO Stefan Schwarzfischer says they have something to fall back onto as two other companies have offered to buy the troubled Chinese built coal-fired power station. “CMEC have been in Botswana for the last month and they completed the due diligence last week. We expect to receive the offer from them on February 8, after which we will respond in ten days’ time. We expect negotiations to last until June 2017, and if we agree the deal should be finalised by January 2018. But if the talks fail, we then go back to the two other firms that have expressed interest to buy the plant,” he told the media in Gaborone this week.

Schwarzfischer declined to speculate on how much the plant could cost but said CMEC would be the first external entity to put a value on the plant that was built for  $970 million in 2014, but has incurred billions of pula in extra costs in remedial works.  A different Chinese company, China National Electric Equipment Corporation (CNEEC), built the plant but it has often broken down since commissioning in 2012, leading to a reliance on diesel generators and imports from South Africa.

“Currently all four units are running at Morupule B and we are not importing any power from South Africa,” Schwarzfischer said.

CMEC and CNEEC are sister companies owned by a Hong Kong listed conglomerate.

BPC currently employs 439 workers

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at the plant, some of which are expected to keep their jobs when the plant is sold. Schwarzfischer says they will try everything in their power to protect as many jobs as possible when the plant is transferred to a new owner. “You can never have 100% protection in situations like this because we will cease to have control over the plant, but we will try and negotiate for a clause where jobs are protected for a certain period of time. This is why we need our BPC staff to be ready and competent when the sale is done so that they can compete for the jobs,” he said.

BPC has been running at a loss for the past eight years and it is currently implementing a new strategy to turnaround its financial position with regards to reduction of operation costs and establishing Independent Power Producers (IPPs).

In its last published results, being 2015/16, the corporation posted a P1.9 billion operating loss, in a year that it also received a P2.3 billion-tariff subsidy from government.

The sale of Morupule B to an IPP will leave the country with just a 120MW power plant, which is currently under refurbishment, being the only power plant that it directly owns. Two other power plants producing a total of 600MW through IPPs are planned for the next five years with the tender for the first 300MW having being already awarded to a South Korean-Japanese Joint venture.

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