Marubeni, Posco up the ante in push for P8bn deal

Yokota says a deal is on the horizon PIC: MORERI SEJAKGOMO
Yokota says a deal is on the horizon PIC: MORERI SEJAKGOMO

Marubeni Corp and Posco Energy have redoubled their efforts to seal the P8 billion project to expand Morupule B, with the launch of a local office and high-level engagement with the new government administration.

The two Asian mega-corps – Marubeni from Japan and Posco from South Korea – won the tender to expand Morupule B by 300MW in 2015 and were due to have begun work last January. Morupule B currently has four units capable of producing 600MW and the new project would have added two more.

However, a dispute with government over guarantees and other commitments for the project has meant a prolonged delay and government has threatened to put the project on the back-burner arguing that the country was being asked to shoulder an unfair proportion of risk for the project.

On Friday, the Asian mega-corps unveiled a change of tact in the matter, launching their joint venture’s Botswana-registered company, Palapye Power Generation, in Gaborone.

The event, in which Energy Ministry officials were noticeably missing from the dozens of senior government officials in attendance, was also held to announce that the Asian firms plan to use Botswana as a launchpad to other projects in the region and beyond.

New Energy minister, Eric Molale and his various lieutenants skipped the event, with the highest ranking government official in attendance being assistant education minister, Master Goya. In contrast, both Marubeni and Posco brought high-powered delegations, including, for the Japanese firm, executives from its South African office. Marubeni’s chief operating officer for its Power Business Division, Yoshiaki Yokota told BusinessWeek the joint venture was confident of reaching an agreement with government soon.

“This is a ceremony to demonstrate our keen interest for this project and we hope we will finalise our discussions soon, hopefully before the end of the year,” Yokota said.  “This is one of the first independent power producer projects in Botswana and first projects always involve many discussions to achieve mutual understanding.

“This is not unique to Botswana and we appreciate that these processes sometime take time.”

He added that while the Palapye Power Generation would focus on the Morupule B expansion, Marubeni was also scouting for opportunities in food production, vehicle distribution and construction machinery supply, amongst others.

Botswana’s ambassador to Japan, Nkoloi Nkoloi said engaging with Marubeni and Posco would be a blessing for Botswana and a break from an era of sub-standard work in public projects.

In a speech which appeared laden unsubtle references to Morupule B’s Chinese contractor, Nkoloi said Japan and South Korea represented two of the world’s leading nations in terms of commitment to high quality public infrastructure and service delivery.

“For far too long we have been languishing in the dark with load shedding, but recent developments show an awakening in our leaders that no economy can thrive without quality energy infrastructure,” the ambassador said.

“Japan and Korea’s DNA stresses on quality products, services and infrastructure. In Japan, building a road is not just about reducing dust, but sustainability, for durability, for quality and to transport goods, services and people.

“When Marubeni joins Posco for infrastructure in Botswana, you can be assured it will be quality infrastructure and power plants that provide power, not the ones that break down after 30 seconds.”

Nkoloi added: “Gone are the days of darkness and load-shedding. Gone are the days of shoddy workmanship and crumbling walls”.

A root cause analysis into Morupule B’s highly publicised troubles laid most of the blame on the contractor’s workmanship.

Editor's Comment
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