Wednesday, May 7, 2014

Investing in Africa: Botswana Power Sector


Investing in Africa: Botswana Power Sector

According to many analysts Botswana has a reputation of being the best managed and among the most economically successful countries in Africa; with credit rating being the highest of any African nation.  The Government of Botswana is committed to creating an attractive climate for foreign investment. There are no foreign exchange controls, no legal distinctions are made between domestic and foreign companies, profits, capital, dividends and interest can be freely remitted without limitations, foreigners can invest in the stock exchange and nationalization of property is forbidden by the constitution. Most foreign investment is in the mining sector.

In the mining sector the diamond one is critical to the economy – it accounts for 30% of GDP and 50% of government revenue.  Botswana historically relied on imports to meet its growing demand for power (in 2008 the peak demand was 500 MW and projections for 2012 are around 600 MW). In 2008, 80% of the electricity supplied in Botswana consisted of imports from adjacent countries, South Africa, being the major supplier. The remaining 20% is generated by the country’s only generation plant, Morupule A, an old and quickly becoming obsolete plant. Quite recently a new 70 MW APR diesel power station  was commissioned near Francistown. Coal generates virtually all the electricity. There are no indigenous sources of oil, hydro power or natural gas. The electrification rate in the country is 39% – which was the huge step in development.  Of all the energy that is consumed, coal accounts for 31.5% of the total, oil 36.5% and biomass 33.1%.

Morupule coal field is the major energy source – it has estimated 9 bln tons of reserves. So, trying to resolve the energy, various efforts are now under way.  CIC Energy is developing the Mmamabula Energy Project which involves constructing a coal fired power facility and a coal mine. In March 2009, it signed a contract with the Shanghai Electric Group to construct a 1,200 MW power plant. It is expected to be completed in 2014. Morupule B Project was launched in February. Its first objective will be achieved by adding 600 MW new capacity through 4 units of 150 MW each, adjacent to the existing Morupule A power station, and associated transmission lines and substations.
Botswana’s own resource options include coal, solar, and prospective coal bed methane. This good table is provided in the World Bank document

 I do recommend all investors to read this document – it has a lot suggestion for investments in Botswana energy.
And some useful links:
Botswana Power Corp

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