Jindal Steel and Energy has submitted a two Canadian Dollar per share (P15 per share) 100 percent bid for the Canadian company which has since 2006 suffered a string of setbacks in trying to spring the 1,200MW project to life.
In a statement released yesterday, the CA said they had determined to authorise the proposed acquisition on the grounds that there is no evidence of any substantive competition concerns that the proposed deal will raise in the energy and coal markets in Botswana.
"The proposed transaction is not likely to result in a substantial lessening of competition, nor endanger the continuity of the service, due to the nature of the transaction being a foreign direct investment. The transaction is also likely to promote technical and economic progress in that Jindal will be able to resuscitate the pending MEP which will be a reliable source for energy in Botswana and possibly with the neighbouring states," said the CA chief executive officer Thula Kaira.
While CIC's dream to develop the MEP was shattered by a failure to commit South Africa's Eskom as the off taker, Jindal will look to the 2.4 billion tonnes at the Mmamabula coal fields as the answer to their huge appetite for fuel to power its steel plants in India.
In coming up with their decision, the competition watchdog also said they considered that the coal and energy market in Botswana is still underdeveloped and also, with no spade yet on the ground at the Mmamabula coal fields, no significant competition issues are likely to arise from the acquisition.
The CA's decision will be a jolt for the resuscitation of the giant coal mining and energy project as it also follows on last week's decision by government to renew CIC's retention licence for an area holding approximately 361 million tonnes of coal at Mmamabula.
However, despite the recent encouraging developments, a key meeting slated for Monday (August 27th) in Mauritius will make or break the deal, as CIC shareholders will vote on whether to accept or decline Jindal's proposal.
While Jindal's proposed P15 a share offer might be lucrative for some shareholders that have hung on to the stock since 2006, others might feel the bid price is too low compared to the P55 per share offered by another Indian firm, JSW Energy, in a bid that collapsed last May.
JSW is headed by Sajjan Jindal, the brother of Jindal Steel chairman Naveen Jindal.