Siseko Njobeni
5 December 2008
Johannesburg — CIC Energy has turned to development finance institutions, export credit agencies and banks for the financing of its Mmamabula energy project in Botswana, the company said yesterday.
CIC and Eskom are expected to conclude a power purchase agreement in a few months' time, allowing Eskom to import electricity from the project to meet SA's electricity needs. The project would be connected to SA and Botswana's grids.
CIC president Gregory Kinross said yesterday that negotiations for power purchase agreements with Eskom and the Botswana Power Corporation were at an advanced stage.
But he would not disclose the tariffs that Eskom, as a prospective buyer, had proposed, saying such details were sensitive.
The global credit crisis has prompted developers around the world to postpone major projects as raising finance for these is likely to be difficult. But CIC said it had targeted development finance, development finance institutions and banks for the funding of the project.
Kinross said the chosen institutions had "largely" been unaffected by the credit crisis.
A total of 80% of the project's financing will be through debt and the remaining 20% through equity. He said CIC would contribute its share of equity funding.
The company would bring on board other "strategic" partners who would include independent power producers.
Kinross said the global credit crisis had adversely affected companies reliant on commercial lenders.
Jennifer Feinberg, CIC executive vice-president of finance, said the Mmamabula project was in line with the mandates of development finance institutions. These included job creation and small business development.
CIC is developing a 1320MW power station and an integrated coal mine in Mmamabula. Power generated by the project would be sold to Eskom and Botswana Power Corporation, the power utility in Botswana.
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