Four bidders race to convert Orapa power station
Mbongeni Mguni | Friday May 8, 2015 15:27
Under the Expressions of Interest tender opened this week, one of the four bidders could supply the Orapa power station with natural gas on a trial basis, as a means of testing the plant’s conversion.
At present, Orapa, an emergency plant for periodic shortages, consumes 17, 000 litres of diesel per hour at its two turbines. The Botswana Power Corporation (BPC) often runs the plant at its full 10-hour cycle due to perennial electricity shortages and the station is among the drivers of the utility’s annual multi-billion Pula subsidies.
Chairing the tender opening this week, PPADB board secretary, Masingoaneng Ramodimoosi, revealed the four bidders as Tlou Energy, Sekaname Pty Ltd, KS Energy and Ocean Ridge Pty Ltd.
“The Ministry of Minerals, Energy and Water Resources will assess the responses and make an appropriate recommendation to the Board on the way forward,” PPADB public relations and education manager, Ditapole Chibua-Tsheboeng told BusinessWeek. Led locally by former MMEWR permanent secretary, Gabaake Gabaake, the Australian Securities Exchange-listed Tlou Energy boasts of being “one of the most advanced Coal Bed Methane projects” in Botswana.
The developer has one of the few independently certified resources in the country’s emerging gas sector, with holdings of approximately 2.3 trillion cubic feet in the Central District. The company recently inked a deal with General Electric for a “gas to power solution” in relation to the Orapa power station and a proposed 300MW gas-fired power station elsewhere in Botswana.
Two other bidders, KS Energy and Sekaname Pty Ltd, were formerly partners in the joint venture that was awarded the operation and maintenance contract for the Orapa power station in July 2008.
Sekaname – which trades as Kalahari Energy – and Tuten, a Turkish energy developer, were also contracted to build and supply a 180MW gas-fired power station for the BPC at Mmashoro.
The two developers hold leases over thousands of square kilometres of rich gas fields in eastern Botswana. Ocean Ridge, on the other hand, has nine CBM exploration licences near Orapa, which spill over into Debswana’s mining lease area.
The licences measure 5,357 square kilometres and thus far, the four-year-old company has drilled more than 6, 000 metres of samples.
Ocean Ridge is a citizen-owned company. According to previous BPC estimates, converting the Orapa plant from diesel to gas could save up to 60 percent of operating costs in the long term. Experts say initially, the infrastructure costs of developing and supply gas to Orapa would limit the initial cost savings.
“However, in the long term, gas would always be preferable to diesel, in terms of costs,” an analyst told BusinessWeek. This week’s tender was open to international bidders, after an initial one floated last year and made exclusive to local companies.
However, procurement insiders say the fact that no external bidders participated, would give government an idea of the uniqueness of CBM development. “With the latest tender, a bidder could have come in saying ‘I can bring in gas from Siberia,’” said an analyst.
“The fact that none did shows you the economics of gas development and that supplying to Orapa will require a local company. You cannot afford the cost of bringing gas across the border.”