Breakthrough looms in Morupule B P8bn expansion stalemate
Mbongeni Mguni | Friday August 31, 2018 12:50
The two Asian mega-corps – Marubeni from Japan and Posco from South Korea – won the tender to expand Morupule B by 300MW in 2015 and were due to have begun work in January 2017. Morupule B currently has four units capable of producing 600MW and the new project would have added two more.
However, a dispute with government over guarantees and other commitments for the project has meant a prolonged delay with government threatening to put the project on the backburner, arguing that the country was being asked to shoulder an unfair proportion of risk for the project. This week, senior officials in the Ministry of Mineral Resources, Green Technology and Energy Security revealed that negotiations were reaching a head with the Asian mega-corps, and other key central government units.
“We have advanced in terms of discussions,” the Ministry’s permanent secretary, Cornelius Dekop told BusinessWeek.
“We have written to them to say that they will probably have an answer from us by October after we have completed our stakeholder consultations which include the Attorney General and the Finance Ministry.”
Dekop explained that the negotiations had originally floundered over the amount of risk government was being asked to shoulder in the expansion of the power station.
“We were not agreeable in terms of the government support agreements, that had been proposed because the risks were onerous on government. “We are currently having discussions with stakeholders including the Attorney General to resolve this.
“It’s still unclear where we will be going,” he said. Marubeni and Posco reportedly wanted a sovereign government guarantee or surety in the form of an upfront payment of about US$804 million, to cushion them against the risk of the Botswana Power Corporation defaulting on future payments for power from the new units at Morupule B.
The new units, known as Morupule B 5 & 6, will each deliver 150MW when built, boosting the country’s electricity self-sufficiency.
The two Asian mega-corps recently upped the ante on the deal by launching a project office at which their senior executives from Japan and South Korea attended in person.
At the event, where Energy ministry officials were noticeably missing, Marubeni’s chief operating officer, Yoshiaki Yokota told BusinessWeek the joint venture was confident of reaching an agreement with the government soon.
“We hope we will finalise our discussions soon, hopefully before the end of the year,” Yokota said.
“This is one of the first Independent Power Producer projects in Botswana and first projects always involve many discussions to achieve mutual understanding.
“This is not unique to Botswana and we appreciate that these processes sometime take time.”