Asian JV wins P8.1bn Morupule B expansion tender
Brian Benza | Tuesday December 1, 2015 18:00
Construction of what would be Botswana’s maiden project under the Independent Power Producer (IPP) model is expected to start late next year with the first electricity seen kicking into the national grid by May 2020.
In a statement released yesterday, the two firms say they will jointly design, finance and construct two 150MW circulating fluidised bed coal-fired units and then operate and maintain the plant for 30 years.
“Being selected as a preferred bidder of the project is meaningful in that we have established a foothold to make forays into Southern Africa,” Yoon Dong-junk, president and CEO of Posco Energy said.
“$600 million will be financed by Export-Import Bank of Korea, Japan Bank for International Cooperation (JBIC) and an international commerce bank through project financing.”
Unlike in the 600MW Morupule B plant, in which government funded the project for $970 million, construction of the new 300MW will be solely funded by the developers.
The companies will then recover their costs by selling power to the Botswana Power Corporation (BPC) through a 30-year Power Purchase Agreement (PPA).
The joint venture, in which each of the two companies hold 50 percent, has also contracted South Korean GS Engineering & Construction Corp to execute the project.
A Circulating Fluidised Bed (CFB) combustion with environment friendly and high efficient combustion technology would be installed in the power plants to lower the emission of pollutants such as nitrogen oxides and sulfur oxides.
The new Morupule B plant, which is expected to take three years to build, will lift power generation to more than 1,000 MW, well above a national demand of about 610MW.
To feed in to the expanded power plant, Morupule Coal Mine (MCM) has started preparatory work towards establishment of a new one million tonnes per annum open cast coal mine.
The open cast mine, which will be built adjacent to the existing underground operations, is projected to be completed by 2017.
MCM’s underground mine currently produces up to 3.2 million tonnes per annum with the bulk of the coal feeding into the Morupule B plant.
Another tender for a 300MW Greenfield power plant is also out which will take local power production to 1,200 megawatts in Botswana in the next five years and help the country wean off South Africa’s electricity supply.
The two power plants are part of government plans to plug any future power shortfalls as demand is expected to increase in line with economic growth.
On the other hand, government is also refurbishing the Morupule A power station as part of a raft of measures to avoid any deficits. The 25-year-old power station was placed under care and maintenance three years ago after plant availability dropped to below 30 percent due to aging components.
BPC’s own estimates indicate that Morupule A will contribute nearly 20 percent of the projected national electricity demand when it is fully returned to the grid in 2016. Solar power plants are also in the pipeline, with 50MW plant earmarked for Jwaneng while similar plant is planned for the north-west region.