African Energy Resources gears up for SA coal IPP programme

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Danette Breitenbach

African Energy Resources has confirmed that two of its 100%-owned Botswana projects - Mmamabula West and Mmamantswe - are being developed to supply South Africa with coal-based power through the latter's cross-border independent power producer (IPP) programme.

Development deals signed

At Mmamantswe, African Energy has entered an agreement where TM Consulting (TMC) will acquire the project for US$20m, subject to achieving certain milestones, principally the financial close of a 600MW integrated power project. TM Consulting is funding all development costs on the project.

In February, African Energy signed a non‐binding term sheet with an experienced South African developer to jointly develop the Mmamabula West Project into an integrated coal mine and 600MW thermal power station for the supply of power in the southern African market.

DoE increases IPP capacity

The agreements seem to be in anticipation of the gazette issued in April by the South African department of energy setting out terms for the country’s coal baseload cross‐border Independent IPP programme.

The terms included that 3,750MW of coal-generated power shall be procured through one or more IPP programmes from cross-border projects. This is an increase from the initial 2,500 MW allocation proposed in December 2014.

It also allows the department of energy to commence direct negotiation with one or more project developers in addition to a tendering process, and specifies that IPPs aim to connect to the grid for new generation capacity as soon as reasonably possible.