Energy station in limbo as parties wrangle
Pauline Dikuelo | Wednesday April 1, 2015 18:00
The companies, Synchrona Waste Management and Kagisano Innovations Botswana were supposed to work as a joint venture under the name, Clean Energy Botswana (CEB), to construct a waste energy power plant at the Pilane landfill, where a carbon capture plant was also to be erected. The project, which is estimated to cost $112 million or P1.07 billion, is coordinated by the Kgatleng District Development Foundation (KDDF), under the auspices of the KDC.
KDDF is headed by Councillor Reverend Mpho Moruakgomo who is also president of the Botswana Association of Local Authorities (BALA). While negotiations were still ongoing with the Botswana Power Corporation (BPC) to get the green light to generate 15MW of power using 400 tonnes of waste from the Kgatleng district and surrounding areas, a dispute erupted between Synchrona Waste Management and Kagisano Innovations as a result of mutual suspicions and mistrust.
This allegedly led to the fallout of the two companies, eventually resulting in them partying ways with each company seeking to pursue the project without the other.
Synchrona is a South African company owned by Michael Olivier and Seth Olivier, who are father and son respectively, while on the other hand, Kagisano Innovations is a company registered in Botswana and owned by Ilkka and Mari Nurma, who are husband and wife.
The two parties agreed in 2013 to submit a proposal to the KDDF and to share profits of the joint project. The proposal stated that Synchrona would develop and construct a waste-to-energy plant at Pilane and that Kagisano would construct a carbon dioxide neutralisation plant to absorb some of the carbon dioxide emissions from the waste to energy plant and thereby extract a range of marketable minerals.
Kagisano co-director, Ilkka Nurma alleged they first met the Synchrona directors at the Ministry of Minerals Energy and Water Resources (MMEWR) almost exactly four years ago. “They were very interested in our Carbon Capture and Neutralisation technology (CCN) and how it integrated and enhanced waste-to-energy,” he explained.
He alleged the two companies then agreed to work together and signed three memorandums of understanding detailing the development of joint venture projects through out sub-Saharan Africa where their responsibilities are, as well as securing the contracts and raising all the needed capital. “This was the main reason for our relocating from Scandinavia to Botswana and for the founding of Kagisano Innovations. All in all, over the last four years they (Synchrona) promoted over a dozen such projects and every single one failed,” Nurma pointed out.
He stated that during their research into waste management in Botswana they were approached by Hellenics Geotechnical, representing KDDF, concerning the situation at Pilane landfill. “Negotiations progressed and we were assured of a contract for a waste management solution. It was decided that a separate company, Clean Energy Botswana would sign the contracts with KDDF and own the project,” he alleged.
He noted that in accordance with their agreement with Synchrona, they informed them of the project they had secured and that it could proceed under the 50-50 Kagisano-Synchrona joint company (Clean Energy Botswana) as had been agreed in their memorandums of understanding. “The contracts were signed last (year) April and since Kagisano had done everything else, Synchrona now only had one single task – to secure the funding as promised.
“They informed us and the other stake-holders in the project that full funding would be finalised by May or June,” alleged Nurma.
He explained that CEB was initially 100 percent owned by Kagisano and later split into a 50-50 shareholding with Synchrona.
According to Nurma, this was the time that things started to go awry.
“Of course, the funding was never secured and Synchrona began buying time with excuse after excuse. Things came to a head at the formal project meeting held on the 20th of November at the KDC Chambers,” he alleged. He pointed out that Synchrona suddenly informed all that were present at the meeting that they are withdrawing from CEB and that they are planning to deliver only the waste-to-energy plant at Pilane outside of the signed contracts.
Nurma also noted that Synchrona have made it clear that they want the project and profits only for themselves and refuse to use the Botswana registered company, CEB, or submit to openness and compliance regarding money movement.
He added that some of the funders they (Synchrona) put forward wished to use offshore accounts. “We have offered to take part in formal mediation but they refuse. Therefore, we are forced to seek out new partners and begin the funding process again,” he alleged.
However, director of Synchrona Seth Olivier denied the allegations made by Nurma, stating that his company is not in agreement with Kagisano Innovations regarding Clean Energy Botswana. “A company called Clean Energy Botswana was formed by Kagisano but neither Synchrona nor any of its directors have been registered as directors or shareholders thereof. We have written statements in our possession by Kagisano that they are the only shareholders,” he alleged. He however indicated that the two parties did agree in 2013 to submit a proposal to the KDDF and to share profits of a joint project, noting that Clean Energy Botswana did not exist at that time. “We can only assume that the allegations arise because Kagisano is aggrieved that we no longer partner with them and that we have been independently requested to submit proposals to the KDDF,” alleged Olivier.
He explained that their “subsequent due diligence” and that of some of the funders they approached, showed that there are serious doubts internationally about the commercial viability of the technology Kagisano proposed.
“In fact no proof of any successful commercial installation thereof was ever produced. Synchrona had no option but to conclude that Kagisano’s proposed technology would not be fit for purpose,” he alleged.
He also alleged that at a meeting held at the council chamber of the KDDF in Pilane, attended by both Synchrona and Kagisano, with full members of the foundation on November 20, 2014, the KDDF formally requested that Synchrona submit a new separate proposal for the waste to energy plant only, and that Kagisano submit a separate proposal for the Carbon Neutralisation plant only.
He alleged Synchrona delivered its detailed proposal on January 12, 2015, adding that a meeting was held recently with the Minister of Minerals, Energy and Water Resources and various other ministers and government officials.
“This was arranged by the Reverend (Moruakgomo) and Synchrona was invited to attend and present an outline of our January 12 proposal,” he alleged. Olivier also stated that Synchrona refused to fund a range of Kagisano company expenses which bore no relationship to any joint project.
“Synchrona has no offshore bank accounts. It is a South African company and has its own South African bank account. We are aware that Kagisano is the sole signatory to a bank account that they opened in the name of Clean Energy Botswana,” he alleged. According to Olivier, Synchrona refused to deposit money into an account where it was not a signatory, adding that Kagisano consistently refused to submit such accounts to them yet they simply submitted increasing claims for Synchrona to cover Kagisano company expenses.
He alleged that Kagisano’s technology is not fit for purpose and that there is no commitment to fund Kagisano which is a company independent of Synchrona.
He said Synchrona originally undertook to seek funding for the Pilane project.
“Synchrona has never agreed to fund Kagisano. The fact that funders found Kagisano’s technology to be in doubt meant that no funding was secured,” alleged Olivier.
He also noted that he has written evidence that Kagisano has made false representations to their United States (US) partners regarding Kagisano’s role and that they have attempted to circumvent Synchrona’s relationship with these partners. When contacted for comment, Councillor Moruakgomo said KDDF cannot consider engaging Kagisano for the project noting that research has shown that the carbon capture technology that Kagisano had proposed was inefficient and has not secured a pilot plan yet.
To cement his point, he produced a document from the internet which read: “A professional survey of material and energy streams has been conducted on CCN in 2011 and it was recommended that more experimental results would be needed to show the correlation between theory and practice.
“There was a complete lack of detailed process schema and exergia-analysis of the heat exchange system. Also the utilisation possibilities of thermal energy of exothermic reactions are unknown. CCN has been unsuccessful to date in securing any pilot or project partners.”
With this, Moruakgomo alleged they were left with no choice but to reject Kagisano’s proposal while they continue discussions with Synchrona. He also revealed that they were still awaiting approval from the government through the BPC, noting that as soon as they got the green light they would get the project off the ground.
Meanwhile, Moruakgomo said the project was one of KDC’s efforts to create employment for Batswana as the project was forecast to employ about 500 people.