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Govt, Tlou Energy close to seal deal for construction of 10MW plant

Publishing Date : 10 September, 2019


Negotiations between the Government and Tlou Energy on establishing a Coal Bed Methane (CMB) gas-to-power plant in the country have reached final stages ahead of commencing development work, the energy company has announced.

The Power Purchase Agreement (PPA) negotiations between the independent power producer and the Government will see Tlou Energy constructing a 10MW power generation plant in the Lesedi CMB area with the generated power sold to the Government-owned Botswana Power Corporation (PBC). This was announced this week by Tlou Energy chairman, Martin McIver, in a notice to shareholders in the company’s 2019 annual report.

“With the company selected as a preferred bidder for this project, Tlou is now in the final stage of the process, being negotiations with the government on a Power Purchase Agreement (PPA) ahead of commencing the development work,” he said. However, McIver said the negotiations will remain confidential until the government is in a position to make an announcement.  “These PPA negotiations are confidential and are being led by the government of Botswana.”

“The submission, which was assessed on eligibility, technical and financial criteria, outlined a staged development commencing with up to 10MW of power generation and included the required connection into Botswana’s national power distribution network,” added McIver. In October last year, Tlou Energy submitted its proposal for development of a pilot CBM gas‐to‐power project to the Ministry of Mineral Resources, Green Technology and Energy Security with permission being granted in May this year.

McIver said steady progress had been made towards establishing Tlou Energy as a key power player in Botswana and the company has also been selected as a preferred bidder for the development of the CBM gas-to-power plant in the country. “This was a key target during the year, as we work towards our goal of becoming a regional power provider in southern Africa through the development of our CBM assets,” the Tlou Energy chairman told shareholders.

He said the company was also privileged to have the support of the forward‐thinking government of Botswana, which announced in 2016 that CBM, a relatively clean source of energy and more competitively priced than solar and diesel, is to be included as part of the country’s forward plan to combat power deficiency. Over the last 12 months, Tlou Energy has completed a work programme, which included drilling of two dual lateral development wells in the Lesedi project. The wells (Lesedi 3 and 4) are located adjacent to the proposed central gas gathering and power generation facility and are currently producing gas.

“With CBM development not previously established in Botswana, Tlou is pioneering CBM development in the region. Successful results from Tlou’s projects could potentially impact a whole new CBM basin and be a significant boost not only for Tlou, but for the whole region,” the company’s shareholders were informed. McIver said upon completion of the initial project, the Tlou Energy would look to expand further and the gas field would be connected to the regional grid, thereby opening the possibility for the company in providing power across the region, through the Southern African Power Pool (SAPP).

“Following the successful implementation of this first project, the company looks forward to evaluating longer-term prospects for the delivery of electricity from CMB in Botswana to neighbouring countries.” Meanwhile, Tlou Energy, Managing Director, Anthony Gilby said his company had made significant advancement in the last one year. In the same notice to shareholders, Gilby said Tlou Energy had established Botswana’s Independent Certified Gas Reserve with enough “2P gas already in place to complete the currently proposed 10 MW power project.

“Tlou has a 100% owned project over approximately 9 300 km2, with enormous scope for gas reserve expansion.  The company has built an experienced in‐country operational workforce.  Landholder agreements are either in‐place or being finalised,” said Gilby adding Botswana investors through pension funds were now the largest shareholder group in Tlou Energy aligning the country’s interest with that of the broader shareholder base.

“At the time of writing, a stabilised gas flow from Lesedi 3 and Lesedi 4 has been achieved. It is anticipated that, based on industry norms, the stabilised gas flow from the Lesedi wells should increase with time until a peak is reached,” the MD said. The electricity market in southern Africa continues to suffer from chronic shortage of supply, so development of gas and gas‐fired power in the region remains a very attractive commercial option for the SADC region. Tlou Energy is listed on the Australian Securities Exchange, London’s AIM market and the Botswana Stock Exchange.



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