Uproar over Morupule B expansion tender
Staff Writer | Friday August 26, 2016 18:00
The local companies have been eyeing government’s proposed 300MW greenfield power plant tender when it first floated in 2013, but now feel that the power station will never see the light of day due to the coming on stream of unit 7 and 8.
With Unit 7 and 8, local power production will be catapulted to over 1,300MW, well above local demand.
Botswana-based companies that have made considerable progress towards exploration, development of mines and power stations include African Energy, Jindal Botswana and Shumba Energy.
The three companies are estimated to have invested over P3 billion in the past 10 years and creating employment for over 300 Batswana.
In an interview with BusinessWeek, an executive with one of the coal companies that had been shortlisted in the 300MW greenfield tender in 2013 said local coal firms are dejected by the government’s decision to give the tender to a company that does not have operations in Botswana and has not invested anything in the country.
“Since being informed of the shortlisting in late 2013, there hasn’t been any progress on that tender. With the coming of Unit 7 and 8 at Morupule, we suspect the greenfield project has been shelved, but the authorities will just not come out and say it. We have invested heavily towards coal beneficiation hoping that we will get a chance to build power stations and supply power to the national grid. Our only hope now is the South African power tender that is currently out, but we all know that can change anytime given what has happened in the past,” he said.
In 2013, government flighted an expression of interest for the 300MW greenfield power plant and thereafter-shortlisted eight companies that had responded to the call.
Companies that were invited to submit bids include; IK Holdings (Australia), Mabesekwa Holdings (China/Botswana), Goldington (USA), Jindal Steel and Power (India), PPN Power (India), ACWA & African Energy (Saudi Arabia/Australia), Marubeni (Japan) and American Energy and Infrastructure (USA).
Since the shortlisting in 2013, the companies say they have not had any progress in the tender.
“Government says it wants the private sector to participate in economic diversification and we have been here exploring for coal and setting up infrastructure as well as creating employment. Although an Independent Power Producer (IPP) will build the units, the fact that the coal will come from a government-owned company, Morupule Coal Mine, is tantamount to crowding out the private sector.
The least that government could have done is give us a chance to participate in the tender since we have invested in Botswana,” said another official with a local energy development-focused company.
Efforts to get a comment from the Ministry of Minerals, Energy and Water Resources were not successful by the time of going to press.
Minister Kitso Mokaila earlier told BusinessWeek that government is currently in negotiations to use the direct appointment method to engage a joint venture between two South Korean firms, KEPCO and Daewoo, to construct Unit 7 and 8 at Morupule B.
Troubled Morupule B (Units 1-4) has a capacity to produce 600MW, but is currently operating below capacity.
Groundwork to expand the plant to 900MW has already started after a tender for construction of another two units (Units 5 and 6) was recently awarded to a joint venture between Japanese, Marubeni and South Korea’s Posco Energy.
If remedial works at the Chinese built Units 1-4 are successful, the coming on stream of Units 7 and 8 will catapult the country’s national generation to over 1,300MW with excess supply amounting to 600MW.
The 300MW Units 5 and 6 are expected to kick into the national grid by 2020 lifting power generation to more than 1,000MW, well above a national demand of about 610MW.
On the other hand, works to refurbish the 120MW Morupule A power station have also started after a tender was awarded to another South Korea company, Doosan Heavy Industries at a cost of $204 million.