BPC seals deal for 180MW power station

*Key tariff agreement to be signed in July
*Local firm mobilises capital for development
*Power station taps into coal bed methane

The Botswana Power Corporation (BPC) and local energy firm, Karoo Sustainable Energy (KSE) have sealed a multi-million Pula deal that will see the construction of a 180-megawatt power station fuelled by coal bed methane next year.The deal, which takes the form of a Power Purchase Agreement (PPA), has reached the final draft stage and is expected to be signed by July, more than two years after negotiations kicked off.The PPA with KSE is the first of its kind in Botswana.Under the 15-year deal, KSE will build, own and operate a 180-megawatt (MW) power station to be built in Mmashoro, and supply the BPC with power. The station will use the proven riches of coal bed methane (CBM) in the area.

On Wednesday, the CEO of Kalahari Energy (KSE's holding company), Steve Martin told Business Week the PPA required financial close of the project within 15 months of signing and full commercial operations within 21 months. "The negotiations have been finalised and we are in a situation of waiting for the BPC to submit a final draft of the agreement for signing, which we expect in July," Martin said in an interview."I cannot compliment the BPC and the ministry (minerals, energy and water resources) enough for understanding their role in helping us commercialise CBM in Botswana."They have been very supportive in how this deal is structured especially in giving us flexibility and time for a financial close."In many countries I have worked in, you will not find parastatal stakeholders realising that they hold a huge responsibility for the commercialisation of such projects." The PPA tariff, denominated in US dollars, consists of a capacity and energy charge, the former accounting for the capacity available to the BPC and the latter being the actual consumption.

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