World Bank loans Morupule with P943m loan

Brian Benza
Staff Writer | Friday May 21, 2010 00:00

 

Morupule B power station is seen as the sustainable long-term solution to Botswana's power shortages, particularly in the face of the decreasing imports from South Africa.

Speaking at the signing ceremony in Gaborone yesterday, Finance and Development Planning Minister, Kenneth Matambo said the project is of great strategic importance to the country, as it will contribute to the national energy security and spur economic growth, thus improving the competitiveness of the national economy.  'The direct project beneficiaries will be the households, mines and manufacturing and the economy at large. 'In addition the availability of reliable electricity will allow the country to continue its rural electrification, with a view to increasing national household access from 47 percent to 80 percent by 2016 and thus contributing to reducing rural poverty,' he said. The World Bank loan, which will be repaid in 30 years, with a grace period of four years, will finance the purchase and installation of transformers, a transmission line from Morupule B to Phokoje substation and a water pipeline from the new Mmashoro wellfield to the project site. The interest rate is the London Interbank Offer Rate (LIBOR) plus 40 basis points.

Morupule B is estimated to cost P11.6 billion and comprises a power station, distribution lines, substations and water pipeline. The funding structure of the project is 50 percent debt and 50 percent equity basis, with government injecting 50 percent as equity into the project and the Botswana Power Cooperation sourcing the debt portion.  The Botswana Power Corporation (BCP) has already secured a loan for P5.6 billion from consortium consisting of Standard Bank and the Industrial and Commercial Bank of China (ICBC) to finance part of the cost of the project.

The loan is guaranteed by the Botswana government with the World Bank also providing a partial credit guarantee.Already, the sum of P1.5 billion was availed by the government to the BPC in September 2008 as upfront payment to the contractor, and this forms part of the equity.

Speaking at the ceremony Ruth Kagia, World Bank country director for Botswana, Lesotho, Swaziland, Namibia and South Africa, said the loan would help Botswana sustain its economic growth and attain economic diversification.

She however noted that countries must explore options for reducing gas emissions that are harmful to the environment. Currently, the country, which imports 80 percent of its power needs, only has one power station - the Morupule power station that was commissioned 24 years ago and produces only 132MW.

The Morupule B power station, which is executed on an Engineering-procurement-construction (EPC)/ Turnkey basis, entails the engineering design, manufacturing, procurement, construction and commissioning of 4 of 1500 MW units. The first 150MW unit is expected to be in service by January 2012, and the last unit by October 2012.

This winter, it is estimated that Botswana's peak demand has risen from its traditional 500 MW to highs of 553 MW.  Besides the 90MW Orapa station and Morupule, BPC gets 250 MW from Eskom, 70 MW from APR's diesel powered station outside Francistown, 50 MW from SNEL of Democratic Republic of Congo (DRC) and another 40 MW from Mozambique.  In addition, by September, the BPC hopes to secure 40 MW from Zimbabwe as part of a plan to rehabilitate a power station in Bulawayo. Matambo is expected to sign another 153 million Euros loan agreement with the AFDB in Ivory Coast next week, which will also go towards financing the Morupule B power station.