CIC Energy has deferred certain financial, legal and engineering activities related to the Mmamabula energy project, in Botswana, with the company's decision driven by the South African government's development time-line for its energy sector integrated resource plan.

In a statement released on Monday, CIC Energy president Greg Kinross referred to the “slow pace of the regulatory process in South Africa” as “frustrating”.

However, he added that the “spending deferrals and our C$41-million treasury give us the flexibility to weather this delay”.

The Mmabula project was to supply electricity to South Africa.

Sketching the background to this, the Canadian-listed company noted that the South African Minister of Energy Dipuo Peters had earlier this month provided information to the public regarding the integrated resource plan, which was to be still to approved and gazetted.

According to the information provided by Peters, the first integrated resource plan (IRP1) would only cover requirements for new generation capacity for the three-year period stretching from April 2010, to March 2013.

Requirements for new generation capacity for later periods (2013/2014 and beyond) – being the period the CIC Energy considered to be the relevant period for the Mmamabula project – would be addressed in a second integrated resource plan (IRP2), which would be prepared following an extensive public consultation process that would start in the first quarter next year, and was targeted for completion in mid-2010.

“Based on the company's understanding of the regulations, an approval of the Mmamabula energy project by the Department of Energy will only be possible following the completion and gazetting of the IRP2, and then only for commencement of commercial operations no earlier than 2014 (or such later period as may be indicated in the IRP2, once completed),” noted the company in the statement.

As a result of these developments, CIC Energy said it had reassessed its current programme of project development activities for the Mmamabula project, designed to facilitate a rapid achievement of financial close and start of construction once regulatory approval had been received.

Given the anticipated content of the IRP1, and the current timetable for completion of the IRP2, the company said it had determined that it would be prudent to defer those project development activities unrelated to the regulatory approval process in South Africa, until such time as the IRP2 had been completed.

This would be implemented by the deferral of activities that were being performed by the financial consultants, legal consultants and engineering consultants who were assisting the company in the development of the Mmamabula project.

CIC Energy said that its decision did not affect its programme of project development activities for the Mmamabula export coal project and the coal-to-hydrocarbons project, which the company intended to continue as previously planned.

CIC Energy is developing the so-called Mmamabula energy complex, at the Mmamabula coal field.

This planned complex consists of the Mmamabula energy project, the export coal project and a potential coal-to-hydrocarbons project.

CIC Energy is listed on the Toronto Stock Exchange and the Botswana Stock Exchange.

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