Government has doubled its contract with Jindal Africa and now requires the firm to deliver 600MW of coal fired electricity, in a project that will be the country's largest Independent Power Producer (IPP) initiative.
As an IPP, Jindal will carry the costs of building the power station, running and maintaining it, while selling the power to the Botswana Power Corporation (BPC) under an agreement known formally as a Power Purchase Agreement (PPA).
The PPA for the initial 300MW plant was signed this morning and will cover 30 years, with Jindal expecting to spend more than $1 billion on the coal mine, power station and associated infrastructure.
Jindal, which has access to 2.7 billion tonnes of coal in the country, last December scooped a contract from government to design, build, finance and maintain a 300MW coal-fired plant. Jindal took over the Mmamabula Energy Complex from Canada’s CIC Energy in 2012 and has been advancing work on several projects intended for prospecting licences in eastern Botswana.
This morning, Minerals and Energy minister, Lefoko Moagi, revealed that the power government sought to procure from Jindal had doubled after officials were able to secure Cabinet approval for the move.
He said the revised procurement was part of several updates made to the Integrated Resource Plan (IRP), government blueprint for electricity procurement between 2020 and 2040.
“When the feasibility was done, it was done for 600MW but the procurement went for 300MW,” Moagi said in an interview after the signing of the PPA. “But we have been revising our IRP and we saw an opportune time that we can go for the 600 rather than the 300.
“Because the procurement had already been done for the 300, we went to Cabinet to seek an additional 300. “This is so that it ties into the procurement that’s already there, so it will go straight to Jindal rather than another procurement process. “This will also then assist in terms of economies of scale, getting things much faster and better for the country.”
Jindal Steel & Power, a multibillion dollar global group, is financing the 300MW from its balance sheet. With global funding of coal drying up, government saw an opportunity to tap into the available funding and build a larger project.
Jindal Steel & Power chairman, Naveen Jindal, said while the 300MW plant had been due complete by the first quarter of 2028, the Indian group’s experience meant the project could be finalised by 2026. Jindal has more than 15,000 MW of generation and coal assets in countries around the region.
“This is a very big moment for us and we hope we can contribute to the economy of the country,” Jindal said. “We are very confident of this project and we want to have it completed by 2026. “However, why should Botswana only do 600MW when we are hearing all the time about the power challenges in Southern Africa, the huge shortages in the region? “One of the most basic ingredients to improving quality of life is energy security and God has given us coal. “Why should we not use it to improve the lives of people? “It would be my dream to see you generating 10,000MW here because you have enough coal and it would electrify the whole region.”
BPC CEO, David Kgoboko noted that by the time of its completion, the 300MW plant will increase the country’s total baseload power to 820MW. This will be with the inclusion of generation from Morupule A and B.
Jindal Africa secured the local contract after beating other shortlisted firms, who included Minergy Limited and Sese Power. Maatla Resources, which was also on the shortlist, pulled out of the tender prior to the final evaluation.