SA plan compels Aviva to 'reassess' Mmamantswe

MBONGENI MGUNI
Staff Writer | Thursday October 14, 2010 00:00

 

The project's success is hinged on South Africa's IRP2010, a policy document guiding that nation's energy development, import and consumption plans over the 20-year period to 2030. Eskom and other state energy entities will use the IRP2010 for the procurement and planning decisions through to 2030. Aviva had been hoping IRP2010 would have provision for Independent Power Producer (IPP) supplies of fossil fuel from Botswana within the timeline of Mmamantswe's proposed development.

It was highly likely that such an outcome would have resulted in Eskom sealing a Power Purchase Agreement with Aviva for Mmamantswe's supplies, enabling the Australian company to source funding for the coal mine and power station's construction.

Yesterday, the CEO of Aviva Corp, Lindsay Reed, said the draft IRP2010 did not hold promise for Mmamantswe, necessitating revisions in terms of the project's development. 'It's fair to say it has not captured what we had hoped to see in it,' he told Mmegi in an interview from Perth.

'It talks about imports of power but not until the next decade. We are currently re-assessing Mmamantswe but in terms of the 1000MW project that we were progressing for the next five to six years. That's not an option under the revised balance scenario proposed by the IRP 2010.

'We will put out our quarterly update next week and we will give indications of what we plan to do. We will have to conduct a technical (analysis to) chart the way forward.'

Released last week, the draft IRP2010 contains 15 scenarios of South Africa's possible energy mix up to 2030, with details on where supplies will come from, when they will come, and various conditions such as levels of carbon and other emissions.

Africa's Department of Energy (DoE) has proposed a balanced and revised balanced scenario, it has invited the public to comment on the entire draft ahead of that country's cabinet approval or rejection of the policy document in November.

DoE's revised balanced scenario envisages fossil fuel imports coming into South Africa between 2027 and 2028, which is way off the five-year development plan Aviva has for Mmamantswe.

The Australian company froze the development of Mmamantswe in May 2010 due to delays in the finalisation of IRP2010. Aviva recently told its shareholders that it was not likely to recover the P64 million spent thus far in developing the project.

The millions spent by Aviva since June 2007 have enabled the Australian company to identify probable coal reserves of 895 million at Mmamantswe, with the entire resource being capable of supporting a 2000MW power station for 40 years. Aviva has also spent on infrastructural, water and other technical assessments as well as annual fees for its Botswana Stock Exchange listing as part of developing Mmamantswe.