Canadian company CIC Energy has rubbished reports that it is to scrap a multibillion-dollar Southern African energy project in Botswana due to spiralling costs.
The company plans to build a coal mine to provide 5 000 megawatt of coal-fired electricity-generating capacity to Botswana and South Africa.
The estimated costs of the Mmamabula project have spiralled from an initial $6-billion to $16-billion, Moody’s analyst Kristin Lindow was quoted as saying on Thursday.
”The huge Mmamabula project is in trouble,” she reportedly said, adding that there was a definite possibility of it being scrapped. ”They are working tooth and nail to prevent that from happening.”
Johannesburg-based CIC president Greg Kinross said on Friday: ”I don’t know where her figures came from. It’s a load of rubbish.”
He said costs were going up in line with the market for generation equipment.
”We are not at the stage yet where we can determine what those increases will finally be, but our last estimate — November/December 2007 — was $9,5-billion,” he said.
The price tag is equal Botswana’s current gross domestic product, or its foreign reserves; in South Africa, it equates to 40% of Eskom’s five-year capital development programme.
Kinross said: ”The project would be back-stopped by Eskom; the South African government would have to back it. Botswana guarantees would only be in relation to its offtake, and in terms of Botswana’s balance sheet, that is not an issue.” — Sapa