TSX-listed energy company CIC Energy has signed a project development agreement with independent power generation company International Power (IPR) regarding its $3- billion Mmamabula energy project, in Botswana, it announced last week.

The agreement had been negotiated in accordance with an earlier agreement, in September 2008, in terms of which CIC Energy and IPR agreed to continue to work together in developing one or more power stations in Botswana that would use coal from the Mmamabula coalfield, CIC said.

The project development agreement sets out the framework under which the two companies would “endeavour to negotiate” definitive agreements in terms of which IPR would become a 35% equity participant in the energy project.

IPR would be responsible for the opera- tion and maintenance of the power station component of the Mmamabula project, said CIC.

CIC spokesperson Erica Belling told Engineering News that this was one of the milestones the company had to reach before the financial closing of the project.

Meanwhile, she emphasised that the signing of an offtake agreement by South Africa’s Eskom was an important requirement of the project as the 1 200-MW power plant capacity, which was one element of the Mmamabula project, was too large for Botswana to take up alone.

CIC had announced earlier in July that Eskom had notified it that it could not commit to the purchase of electricity from the project, given that it had not yet finalised its funding model.

The energy company had announced on July 2 that it had submitted a tariff offer to Eskom and had been hoping to finalise a power purchase agreement with the utility by midyear.

Company president Greg Kinross said at the time that it would review its project development programme, in light of Eskom’s announcement.

Belling confirmed that it was not currently looking at supplying electricity from the project to any other countries or power utilities.

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