The developer of the proposed 2 100-MW to 2 460-MW coal-fired power station on the Mmamabula coalfields, in Botswana, says it first needs to conclude a definitive agreement with a selected engineering and construction partner before it will be in a position to sign power purchase agreements (PPAs) with either the South African power utility, Eskom, or the Botswana Power Corporation (BPC).

Tau Capital's investor relations VP Erica Belling, who is authorised to speak on behalf of CIC Energy, told Engineering News on Wednesday that it was still engaging with a short-listed group of potential engineering, procurement and construction (EPC) consortia, which would be contracted by CIC Energy to develop the project on a turnkey basis.

She indicated that a "preliminary" agreement with the contractor should be in place within weeks or months, but that a "definitive deal" with the chosen EPC consortium would probably only be signed during the fourth quarter of 2008.

Only then would CIC Energy know the true costs of the project and be in a position to conclude the PPA negotiations with Eskom and BPC, Belling explained, while confirming that the bulk of the offtake would be destined for the power-hungry South African market.

She refused to be drawn into a discussion about whether the project was being held up by Eskom, speculation which was raised openly at a media briefing on Tuesday - a briefing itself convened to unveil a power-rationing response to the power cuts afflicting South African citizens and businesses.

At the gathering, Eskom strongly denied suggestions that it was responsible for delaying the development of the Mmamabula coal mine and energy project.

In fact, Eskom Enterprises MD Brian Dames, who oversees all capital projects and has a board mandate to pursue supply agreements with independent power producers (IPPs), said Eskom was ready to sign the contract with Mmamabula, but that CIC Energy was not yet in a position to do so.

Dames said that he intended to again send CIC a letter stating that Eskom was ready to make a "firm offer" to purchase power from the Mmamabula project. He also warned that, if Eskom did not receive a response in the next few weeks, it might terminate discussions with CIC and seek "alternative South African IPPs".

Belling could not be drawn on the details of its discussion with either Eskom or the BPC, save to say that, until CIC had better visibility of what the likely cost of the project would be, it would not be in a position to conclude a PPA with either party.

Last week, CIC Energy announced that the schedule for the Mmamabula project would be delayed by about six months. It said strong demand for power plant builds, and the prevailing engineering resource constraints, were increasing lead times for power plant equipment and construction services.

Financial close for the first phase of the project was now expected in the fourth quarter of 2008, followed immediately with the start of construction in the same quarter.

This would push the commercial operation of the first unit of the power station to late 2012, or early 2013. The second and third units would come online at six-month intervals following the first unit.

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