PPADB approves P8bn Morupule B expansion tender

Construction if the new Morupule plant is expected to be complete by 2020
Construction if the new Morupule plant is expected to be complete by 2020

The Public Procurement and Asset Disposal Board (PPADB) has approved a request by the Ministry of Minerals Energy and Water Resources to award a $800 million (P8.7 billion) tender for expansion of the Morupule B Power Station to a consortium from Asia.

In a notice published in the Daily News yesterday, the PPADB said a joint venture between Japan’s Marubeni and South Korean, Posco Energy has won the bid to expand the Morupule B Power Station by a further 300MW. The consortium will supply Botswana Power Corporation (BPC) with power over a 30-year period at a cost of P812.56 per Megawatt hour.

“A request by the Ministry of Minerals, Energy and Water Resources to award the tender at Morupule to Marubeni-Posco Energy consortium at a levelised cost of electricity of P812.526 per Megawatt hour (MWh) has been approved,” said the PPADB. A MWh is equal to 1,000 kilowatts of electricity used continuously for one hour.

Construction of what would be Botswana’s maiden project under the Independent Power Producer (IPP) model is expected to start late this year with the first electricity seen kicking into the national grid by May 2020.

In a statement released earlier when the JV was named preferred bidder, the two firms say they will jointly design, finance and construct two 150MW circulating fluidised bed coal-fired units and then operate and maintain the plant for 30 years.

“Being selected as a preferred bidder of the project is meaningful in that we have established a foothold to make forays into Southern Africa,” Yoon Dong-junk, president and CEO of Posco Energy said.

“$600 million will be financed by Export-Import Bank of Korea, Japan Bank for International Cooperation (JBIC) and an international commerce bank through project financing.”

Unlike in the 600MW Morupule B plant, in which government funded the project for  $970 million, construction of the new 300MW will be solely funded by the developers.

The companies will then recover their costs by selling power to the BPC through a 30-year Power Purchase Agreement (PPA).

The joint venture, in which each of the two companies hold 50 percent, has also contracted South Korean GS Engineering & Construction Corp to execute the project.

A Circulating Fluidised Bed (CFB) combustion with environment friendly and high efficient combustion technology would be installed in the power plants to lower the emission of pollutants such as nitrogen oxides and sulfur oxides. The new Morupule B plant, which is expected to take three years to build, will lift power generation to more than 1,000 MW, well above a national demand of about 610MW. To feed in to the expanded power plant, Morupule Coal Mine (MCM) has started preparatory work towards establishment of a new one million tonnes per annum open cast coalmine. The open cast mine, which will be built adjacent to the existing underground operations, is projected to be completed by 2017.

MCM’s underground mine currently produces up to 3.2 million tonnes per annum with the bulk of the coal feeding into the Morupule B plant. Another tender for a 300MW Greenfield power plant is also out which will take local power production to 1,200 megawatts in Botswana in the next five years and help the country wean off South Africa’s electricity supply.

Briefing the media in Gaborone last week, the minister of Minerals Energy and Water Resources, Kitso Mokaila said Botswana is set to become a net power exporter in the next three years when three projects that are currently underway are completed.

“We have also awarded the tender for the refurbishment of the 130MW Morupule A power station. Works have already begun and we plan to have the three of the four 33MW units running before year-end.

“We expect to be producing about 1020 MW by 2019. Currently our power demand stands at 600MW and is expected to rise to 700 by 2019. This should leave us with a surplus of over 300MW which we can export into the region,” he said.

The tender to refurbish the 120MW Morupule A power station was awarded to South Korea’s Doosan Heavy Industries at a cost of $204 million.

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