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SA backs 'trimmed' power project
25/06/2008 07:14 - (SA)
London - Botswana and South Africa remain committed to a downsized CIC Energy Mmamabula energy project, Botswana energy minister Ponatshego Kedikilwe said on Tuesday.
His is the first official confirmation that the two governments have not turned their backs on the project.
Speaking from Gaborone, he said: "Botswana has no intention of abandoning Mmamabula, neither has South Africa.
"The project just got too big for us in its present configuration."
He and his South African counterpart, Alec Erwin, had baulked at a price tag now at close to $16bn, after initial estimates closer to six billion dollars.
"When it came to the reservation fees for the construction, we knew that was too much," Kedikilwe said. "We are now working hard with CIC Energy (the Canadian and Botswana listed developer) to reconfigure the project so that it can deliver energy into Botswana, South Africa and the region."
The risk fees would have to have been shared between Botswana and South Africa. Although Kedikilwe did not give any details, the numbers tell the story.
The $16bn price tag reported by Moody's ratings service is 1.6 times Botswana's current gross domestic product, or its foreign reserves; and in South Africa 40% of power utility Eskom's five-year capital development programme.
Guarantees sought from Botswana would have been $4bn - 40% of its GDP or reserves - in line with its expected offtake of 25% of power generated at Mmamabula.
Similarly, the project would have looked to Eskom, which was in line to take 75% of the power, for a $12bn guarantee - 28% of its expected total capital spending over the next five years.
- Sapa
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