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Africa|Botswana|Coal|Energy|Gas|Petrochemicals|Petroleum|Power|PROJECT|Projects
Africa|Botswana|Coal|Energy|Gas|Petrochemicals|Petroleum|Power|PROJECT|Projects
africa|botswana|coal|energy|gas|petrochemicals|petroleum|power|project|projects

Kibo, Shumba reorganise Botswana coal IPP arrangements

25th September 2019

By: Tasneem Bulbulia

Senior Contributing Editor Online

     

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Multi-asset, Africa-focused Kibo Energy has signed a binding heads of agreement with energy development company Shumba Energy and various subsidiaries of each party to reorganise the arrangements for the Mabesekwa coal independent power project (MCIPP) and its associated coal asset in Botswana.

Kibo has an 85% interest in Kibo Energy Botswana (KEB), the company that holds the MCIPP, while Shumba owns the remaining stake.

The MCIPP comprises a 761-million-tonne coal mineral resource held entirely within KEB, with KEB having right to a 303-million-tonne subset and Shumba retaining rights over the balance. The parties have also been undertaking studies investigating the potential to build a 300 MW integrated power project at Mabesekwa.

Under the reorganisation, the MCIPP retained assets will be consolidated back into KEB and Kibo’s interest in KEB will be reduced to between 35% and 40% to maintain Kibo’s look-through interest in the MCIPP resource and make sundry adjustments to recognise Kibo’s project expenditure.

An additional joint venture (JV) to be incorporated between Kibo and Shumba will enable continuation of the advancement and operation of the existing MCIPP energy projects.

Kibo, Shumba and their respective subsidiaries will retain their existing interests in the MCIPP and the existing shareholder agreement between them to govern their JV and shareholder interests, including the protection of minority interests.

Further, Kibo and Shumba will jointly manage and oversee the development of a proposed new bespoke 300 MW power station (KP1 power plant) through the incorporation of a new company in which Kibo will hold between 35% and 40% and Shumba the balance.

Shumba will provide the full development funding requirement for associated feasibility and technical studies for the KP1 power plant.

The KP1 power plant is in addition to the MCIPP and is expected to provide fuel for a petrochemicals plant (PCP), which will provide Botswana with up to 80% of its domestic liquid/gas fuel requirements, and later the Southern African market at large.

Currently, all of Botswana’s liquid/gas fuel is imported.

The consolidated MCIPP resource will supply the PCP, the KP1 power plant and the MCIPP power plant with coal.

A variety of shareholders’ and joint development agreements will govern the management of the various JVs, including minority interest protections, with details of Kibo’s final interests in the various entities and the MCIPP resource to be advised upon completion of the reorganisation.

The agreement is conditional on a variety of commercial and technical conditions precedent.

Kibo CEO Louis Coetzee indicated that this reorganisation enabled Kibo to more fully leverage and derisk the MCIPP resource by pursuing three different potential revenue streams.

“With the strong local and international support and supply agreements already in place, we are exposed to a much larger opportunity in addition to what we are already developing in Botswana, further strengthening our existing relationship with Shumba,” he added.

Shumba last month announced that it had entered into a JV partnership giving it an 80% interest in Coal Petroleum, which is developing a commercial-scale liquid fuels production facility to provide Africa with energy fuels.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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