Gov�t faces P4bn suit over new Morupule B contract

Industry sources with knowledge of the contract between the Botswana Power Corporation (BPC) and the Japan’s Marubeni and South Korea’s Posco Energy say it contains a $400 million (P4 billion) breach of contract clause.
 “Marubeni can sue government and the Botswana Power Corporation for $400 million, which is the profit that the contractors were supposed to make over the 30-year period of the Power Purchase Agreement (PPA). I am not sure if they can renegotiate the whole contract itself but if the project doesn’t go ahead because of the guarantee, then it would come at a huge cost to the government,” said the source, who declined to be named, as he was not authorised to speak on the matter.

Whilst Energy Minister Sadique Kebonang signed the PPA with the contractors in December last year with expectation that works would start in January 2017, construction of the 300MW power station known as unit 5&6 is yet to start with Marubeni demanding that government pay an $800 million sovereign guarantee upfront.