300MW Power Project to cost P5.6 billion

MBONGENI MGUNI
Staff Writer | Monday August 30, 2010 00:00

The MDPP is being developed by CIC Energy and Chinese industrial giant, Golden Concord Limited (GCL), through their subsidiaries who moved the project a step further by signing a shareholders' agreement last week.

CIC Energy spokesperson, Erica Belling, said MDPP's capital costs would be raised through debt finance and equity, with the former comprising not less than 70 percent of the total required.  Project shareholders, CIC International and GCL Botswana, would raise equity for the balance of the capital costs.

CIC Energy expects to raise its equity contribution through a payment the Chinese company will make to it for its historical costs related to MDPP and a development fee.  The Canadian firm will also tap into its 30 million Canadian dollar (P195.2 million) corporate treasury to raise its equity commitment to MDPP.

Belling said Chinese financiers would support the debt raising exercise towards MDPP.  'GCL Projects Botswana Limited, an indirect wholly owned subsidiary of Golden Concord, shall assist the project companies in raising of the financing for MDPP,' said the spokesperson.

'Chinese financial institutions are expected to contribute the majority of the debt funding.  The debt is anticipated to be non-recourse to CIC Energy.'

CIC Energy President, Greg Kinross, hailed the latest developments surrounding fund raising for MDPP.  'Golden Concord is an excellent partner that is technically very capable and has access to capital from Chinese banks and financial institutions,' he said.

Golden Concord intends to significantly grow their business internationally.  Beyond MDPP, there is potential for future collaboration on CIC Energy's Export Coal Project and future power plant expansions.

'We see Golden Concord as a strategic partner in our future growth,' said Kinross.

Under the shareholders' agreement, CIC International will own 30 percent of a new holding company called GCL-CIC Mookane Power Holdings Corp, with GCL Botswana holding the balance. GCL Botswana is majority owned by GCL Projects Botswana Limited, itself a wholly owned subsidiary of Golden Concord.

CATIDC Power, a subsidiary of the China-Africa Trade & Industry Development Corporation, holds a minority shareholding in GCL Botswana.

GCL-CIC Mookane Power Holdings is the vehicle that will hold equity in two project companies that will develop MDPP, Belling explained.

According to timelines made available last week, MDPP's shareholdings are fast-tracking progress towards a financial close and commencement of full construction by the second quarter of next year.  In the interim, the developing partners hope to seal a Power Purchase Agreement with the Botswana Government, secure mining and power licences and funding, and commence equipment procurement, among other major milestones.Kinross said MDPP would be fast-tracked 'to deliver electricity in the middle of 2013, all going well'