Mmamantswe (1000MW) power project still on-Aviva

Brian Benza
Staff Writer | Wednesday February 3, 2010 00:00

In a quarterly update, the company which is sitting on 1.3 billion tonnes of coal reserves in the central district near CIC's Mmamabula, says it is finalising the SRK mining studies for the Mmamantswe Integrated Coal and Power Project although they do not expect any positive feedback from Eskom until late this year.

Eskom was supposed to be the project's offtaker, but are yet to commit to any agreements to purchase power from them, highlighting the need to finalise internal funding mechanism before dealing with Independent Power Producers (IPP) such as Aviva and CIC energy in Botswana and many others in south Africa.

' The South African regulator is currently hearing submissions on Eskom's application for a tariff increase. The South African government is instigating an Integrated Resource Planning process. 'While good progress is being made, Aviva does not expect South Africa to be in a position to solicit or entertain proposals from IPPs until late this year.

The activity schedule at Mmamantswe will reflect this timing outlook,' the company said.

Despite the Eskom setback, the company says progress is still being made on the project with the mining study and resource estimates having been completed and the final drafts currently being reviewed by the Aviva management team.

'An EPC quote for a two unit power station at Mmamantswe has been received from Shanghai Electric Corporation. The quote is very competitive based on publicly available numbers for other similar installations in the region,' added the company.

Aviva, which is also listed on the Australian Stock exchange plans to develop an initial 1 000 MW power station using four-and-a-half million tonnes of coal per annum.

Mmamantswe sits near the Mmamabula resource area in eastern Botswana and both companies hope to link to the South African Power Pool network and to integrate their transmission into Botswana Power Corporation and Eskom lines.

After the July stalemate in which Eskom said it could neither 'accept nor reject' the offer to buy power from the Mmamabula project, CIC president Greg Kinross said they were now hoping to sign the PPA by the end of March 2010 after the financial year end of Eskom.

But now, according to Eskom, the tariff application is part of this process and all IPP discussions have to be frozen until end of June 2010. This means the IPPs will now only have a chance to sign a PPA with Eskom from July 2010.

CIC had planned to bring the first generating set at its proposed 1,200MW Mmamabula station on line during 2013, but to meet that target, it would have to have signed a PPA with Eskom by the end of September this year.

The continued delays are likely to affect Botswana's power plans, which had factored in supply from the project in its efforts to satisfy local demand following gradual supply reductions from Eskom since January 2008.

Botswana was to consume 25 percent of the 1200MW to be produced from the initial phase of MEP. According to initial plans, construction of the plant should have begun in the last quarter of last year, while commercial operations were to commence in late 2012.