Govt considers tariff offer for 300MW station

MBONGENI MGUNI
Staff Writer | Friday October 22, 2010 00:00

CIC Energy and Golden Concord Limited (GCL), MDPP's equity partners, are hoping to receive feedback from Government by March next year on the commercial offer they submitted on August 27, 2010.

On September 7, the partners submitted a licence for the 1.3 million tonne per annum coal mine that will support the power station, while the Department of Environmental Affairs is perusing the Environmental Impact Assessment for the project.

In a management discussion and analysis released this week, CIC Energy said the development of MDPP was moving ahead full steam.

The 300MW project represents the first money spinner CIC Energy shareholders can expect from the 2.6 billion tonnes of coal held in the Central District.

MDPP's bigger twin, the 1, 200 Mmamabula Energy Project, is presently on ice pending the allotment of supply quotas by South Africa, a move expected to occur only in the next decade.

CIC Energy management said other technical and regulatory processes towards the commissioning of MDPP were well advanced, most of these leveraging on the work already done for the Mmamabula Energy Project.

Key milestones ahead include the signing of an Engineering, Procurement and Construction contract, the signing of a Power Purchase Agreement, receipt of various licences and permits, financial close and commencement of full construction by the end of September 2010.

Funding for the project will be 70 percent debt finance, these being sourced from Chinese institutions from where MDPP's majority equity partner, GCL Botswana, comes.

While both CIC Energy and Golden Concord will bear MDPP's equity costs,  the Canadian outfit expects to raise their contribution through a payment the Chinese company will make for its historical costs related to MDPP and a development fee. Besides this, the Canadian firm will tap into its 30.2 million Canadian Dollar (P192.7 million) cash balances. Director of Mines, Kgomotso Abi, said the government was in possession of MDPP's application for a mining licence and the tariff offer.

'We can make MDPP happen as Botswana, but the larger project is out of our hands,' he told a mining conference earlier in the week.

'Let's be frank: unless the Integrated Resource Plan 2010 actually makes the Mmamabula Energy Project possible, I think it will be dormant for sometime.'