Botswana's Coal Export Route Decision and Power Project Tenders Linked

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--The Southern African Customs Union (SACU) was founded in 1911 and currently has in its membership Botswana, Lesotho, Namibia, South Africa and Swaziland. Constructed as a way to subsidize the economies of the colonial neighbors of the regional power, South Africa, through border tariffs, it also reflects the human, linguistic and historical relationships of the region, to which can be added Zambia, Zimbabwe, Mozambique and Malawi as close first cousins.

A key nation in this region of developing democracies, Botswana stands out with key resources and an ability to choose development directions. With a population of just more than 2 million and one of Africa's premier wildlife attractions, the country controls the world's leading diamond industry and has the potential to be a leading global coal supplier and a regional power supplier.

It is in this environment that the government will issue a tender this year for two independent power producer (IPP) projects to meet power demand growth. The IPPs will be selected on a build-own-operate (BOO) basis and will sell power output to the Botswana Power Corporation (BPC) (Gaborone).

The first 300-megawatt (MW) project will expand the BPC's coal-fired Morupule plant and will be scheduled to come online by 2015-16. The second plant is scheduled for operation in 2018-19 at a site to be decided according to the government, which is hoping that the successful tenderer(s) will fund the projects off their balance sheet.

With a current coal mining production of just three 3 tons annually, the country has estimated available coal reserves of 200 billion toms and has issued a number of coal-prospecting licenses now current.

With South Africa and Mozambique as neighboring coal exporters and potential power customers, Botswana has to decide on optional routes for coal exports through close neighbor Namibia, which has an Atlantic coastline, or through Mozambique, which has an Indian Ocean coastline. The Chinese coal market and supply line economics will be the drivers of the route decision.

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