BOL finalises preps for P30bn coal-to-fuel project
Mbongeni Mguni | Monday May 23, 2022 04:14
Known as Ikaegeng XTL (coal-to-liquid), the ambitious project aims to tap into the billions of tonnes of coal lying untapped in the country, with technology applied to produce various petroleum products for domestic use.
While 11 companies were shortlisted for the project after a prequalification tender in August 2017, Botswana Oil (BOL) has since repackaged Ikaegeng as a Public Private Partnership initiative and finalised a feasibility study showing that nearly 3,000 jobs could be created during construction and operation.
This week, BOL’s Senior Manager (New Ventures) Gamu Mpofu told the Botswana Resources Infrastructure Energy Forum that government had approved the project for procurement of a development partner through the issue of a Request for Proposals.
“We will be going to the market to procure a private partner and this is a huge opportunity for investors and the country,” he said.
“People think coal is dirty but for us, we need it.
“This project can happen and it will within the environmental considerations that we have signed at various levels.
“We have looked at that element and we did the PPP study which has been approved.”
The push to accelerate the country’s own sources of fuel comes as local supply comes under pressure from troubles in South Africa’s refining capacity. South Africa, which supplies nearly all of Botswana’s petroleum products, has suffered a rapid loss in refining capacity with several major plants suspended or ageing out of use.
Figures shared by BOL show that from a refining capacity of 703,000 barrels of oil per day in March 2020, South Africa by March this year was down to 303,000 barrels per day.
“We are relying on a country that is now also importing and we have to do something so that we don’t put the burden on them,” Mpofu said.
“There is no investment in refining capacity taking place in the region. There are some developments in Angola due to come on stream, but those alone are not enough for us to rely on.”
Details shared by the state oil utility indicate that the envisaged plant could be required to produce 12,000 barrels of oil per day over a lifespan of 30 years. BOL officials previously told BusinessWeek that Ikaegeng could potentially produce up to 80% of the country’s annual fuel consumption of 1.2 billion litres.
BOL’s studies also show that just over 1,500 jobs could be created during the construction phase, with 1,420 jobs during the plant’s operational phase. The plant could contribute more than P1 billion per annum in various taxes to government.
Under the planned PPP structure, fuel from Ikaegeng would be bought by BOL and others, then on-sold at a wholesale level for final sales to commercial or retail outlets in the country.