Brian Benza
2 December 2008
The 1 320 Megawatt Mmamabula Energy Project (MEP) is gathering momentum at a time when most mining and energy development projects are folding due to the global financial crisis.
MEP promoters CIC Energy yesterday announced the selection of Shanghai Electric Group Co. Ltd. (SEC) as the preferred Engineering, Procurement and Construction (EPC) contractor for the first power station to be built at the Mmamabula coalfields.
CIC Energy also announced the appointment of Parsons Brinckerhoff (PB) as owner's engineer for the project.
As a result, CIC Energy has entered into a preliminary agreement with SEC for MEP, a project whose power station and mine's capital equipment and infrastructure costs are estimated at US$3 billion.
The finalisation of the EPC contract, including definitive terms, is expected before the end of the first quarter of 2009 and is seen as key to concluding agreements with electricity off-takers and lenders.
Despite all the problems that the project has faced, commercial operation of the power station is expected in late 2012 or early 2013, subject to the conclusion of all project agreements (including the EPC contract) and the execution of definitive loan agreements (financial close) by mid-2009."SEC is perhaps the largest power station manufacturer in the world and SEC's participation in this project is a major asset to the MEP," said CIC Energy president Greg Kinross.
"The execution of the Preliminary Agreement with SEC as the preferred power station EPC contractor for the Mmamabula Energy Project positions us very well for an anticipated start of construction in 2009, which is one of the MEP's compelling advantages."
CIC now hopes to submit formal bids to the two off-takers, South Africa's Eskom and the Botswana Power Corporation, for long-term Power Purchase Agreements (PPAs) and to reach an agreement with an independent power producer (IPP) partner in the early part of next year.
The procurement process for the construction of the coal mine is also expected to start in early 2009 while early infrastructure works are projected to begin in mid-2009.
"We also expect to conclude PPAs and other project agreements, including those with the Government of Botswana, in the middle of 2009 and thereafter start the construction for the power station and coal mine," said CIC.
"Shanghai Electric is delighted to be appointed as the preferred EPC contractor for the Mmamabula Energy Project and looks forward to concluding the EPC contract within the next few months," said Jianhua Zheng, the President of the SEC group that manufactured 30 gigawatts of power plant capacity last year.
"We are confident of executing a successful project in Botswana with CIC Energy and look forward to growing our business in Africa."
SEC is a vertically integrated company with subsidiaries that provide all the key components for the building of a power station including boilers, turbines, generators and flue gas de-sulphurization equipment.
The group has had technology cooperation agreements with other leading companies like Siemens, Alstom and Foster Wheeler. Today, SEC undertakes projects and supplies equipment on a worldwide basis.
The owner's engineer Parsons Brinkerhoff will assist with the detailed evaluation of SEC's firm bid package and the finalisation of technical specifications for the EPC contract.
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