Siseko Njobeni
2 December 2008
Johannesburg — CIC Energy has selected Shanghai Electric as the preferred engineering, procurement and construction contractor for the planned power station at the Mmamabula coal fields in Botswana.
The engineering, procurement and construction contract is key to CIC's finalisation of power purchase agreements with potential buyers of electricity from the power station, including Eskom and Botswana Power Corporation, the Botswana national power utility.
Toronto-listed CIC said yesterday that it was negotiating the terms and conditions of the power purchase agreements with Eskom and Botswana Power Corporation.
"As the terms and conditions of these agreements had been substantially negotiated previously, CIC Energy anticipates concluding the agreements in mid-2009. The expected term of these power purchase agreements is approximately 30 years."
A successful conclusion of the power purchase agreement between Eskom and CIC Energy and the importing of electricity from the power station would ease SA's electricity supply shortage.
CIC said that after an initial due-diligence process it had signed a preliminary agreement with CIC Energy. It expected to conclude the terms for the engineering, procurement and construction contract before the end of the first quarter next year.
CIC Energy said it would submit an application for an independent power producer licence to the Botswana government early next year. The procurement process for the construction of the planned 4,5-million tons a year coal mine that will supply coal to the power station would also begin early next year, the company said.
It had already completed the mine plan. It would make a submission for a mining licence to the Botswana government this month .
The conclusion of the engineering, procurement and construction contract would also pave way for the start of construction on the power station next year, CIC said.
Subject to the conclusion of all project agreements and execution of loan agreements by the middle of next year, commercial operation of the 1 320MW power station was expected in 2012 or early 2013.
CIC Energy said Parsons Brinckerhoff was appointed owner's engineer for the Mmamabula energy project. Its tasks would include helping to finalise technical specifications of the engineering, procurement and construction contract, and evaluation of Shanghai Electric bid package.
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