Economic diversification of any kind is likely to require more plentiful supplies of electricity. Botswana Power Corporation (BPC) has traditionally imported 80% of the country’s power requirements from South African power giant Eskom. However, Eskom no longer has sufficient spare capacity to increase exports to other members of the Southern Africa Power Pool (SAPP) as and when required and indeed is seeking to phase out most of its long term export contracts. Morupule A has been the country’s only power plant until now but Botswana’s traditional position as a net power importer should end with the completion of the 600MW Morupule B coal fired power plant.
The first of four 150MW phases at Morupule B is due to come on stream very soon. The completion of the first phase only means an additional 150mw to the country’s power production and nothing will change regarding the pricing and incidents of load shedding.
Morupule B has been developed by China National Electric Equipment Corporation (CNEEC) and unfortunately 75% of the short-term jobs created by the project have been given to Chinese workers. The facility is expected to satisfy domestic requirements in the short term but more capacity will be needed from 2016 onwards if the economy continues to grow as quickly as expected. Morupule coal mine, which is owned by Debswana, is currently ramping up production from 1.2m tonnes a year to 2.8m tonnes a year in order to supply the new plant.
In the shorter term, problems have been encountered on the latest addition to national generating capacity: the 90MW Orapa power plant, which was completed last October. Recent power rationing has also been caused by maintenance work on the 132 MW Morupule A plant. Orapa is initially being fed by diesel but it is hoped that both it and the 180MW Mmashoro power plant can be supplied with domestically produced coal bed methane (CBM) in the longer term.
The two plants are being developed by Karoo Sustainable Energy (KSE), a joint venture of Botswanan firm Kalahari Energy and power sector consultancy Tuten of Turkey. They will become the first unconventional gas fired power plants on the African continent when they are supplied by a pipeline from Kalahari Energy’s CBM reserves in the Kalahari Karoo Basin. Another 70MW will be provided by the Matshelagabedi plant, which is also approaching completion.
Is coal Botswana’s new diamond?
At the end of January, President Ian Khama announced that the government was lifting its moratorium on coal and coal bed methane (CBM) exploration licences. The ban had been introduced last June to allow Gaborone to undertake a study into the scale and management of the country’s resources. The new investment regime is designed to ensure that only companies with the financial muscle to develop projects, including the required infrastructure, will be awarded licences.
The new coal mining regulations may be designed to avoid future problems akin to those experienced on CIC Energy Corporation’s Mmamabula scheme. The Mmamabula scheme includes the development of a coal mine, a 1.2GW power plant that would mainly export electricity to South Africa and eventually a CBM fired power plant. It is difficult to put even a rough figure on the size of the country’s unconventional coal reserves because of the lack of exploration work to date. However, the government of Botswana estimates reserves in the Karoo Basin at about 60 trillion cubic feet of CBM plus about 136 trillion cubic feet of shale gas.
Such unconventional gases are already changing the face of the global gas industry. Based on current information, Botswana and South Africa possess the greatest unconventional gas potential in Africa. Confidence in the country’s CBM potential increased in November when South African synthetic fuels specialist Sasol and Australia’s Origin Energy signed a deal to explore three blocks in Central Province for CBM resources over the next two years. Working under their Kubu Energy Resources joint venture, the two companies will be able to begin work now that the licensing moratorium has been lifted.
Sea access still a hurdle
The country has thus far tapped only a small proportion of its solid coal reserves for domestic power generation and even then it has been forced to import most of its electricity. Now, however, the government expects to satisfy its entire power needs domestically, while exporting electricity to neighbouring states through the Southern Africa Power Pool (SAPP) and also exporting coal overseas.
Government research suggests that Botswana could produce up to 90m tonnes of coal a year, the vast bulk of it for export. To put that into context, South Africa, where the coal industry comprises a large proportion of the national economy, exported 65m tonnes of coal in 2011. As a result, the industry has the potential to generate even more income for Botswana than diamond exports. Apart from Mmamabula, African Energy Resources hopes to produce up to 5m tonnes a year on its Sese project. A first phase of 1m tonnes a year could be developed by the end of next year using road transport but rail capacity would be needed thereafter. The main Sese seam averages 14 metres in thickness and stretches over 35km.
South Africa’s own giant coal industry and Mozambique’s emerging position as a major coal producer mean that there is little scope for Botswana to export coal elsewhere in Africa. South and East Asia are likely to be the most important markets. As a landlocked state, Botswana must therefore transport its coal to a port in a neighbouring state.
There is no spare coal haulage capacity on the South African rail network. Even if a new railway to the south were developed, South African ports would be unable to handle Botswanan coal because of the lack of spare capacity. A new coal export terminal must be built, almost certainly outside South Africa. Walvis Bay already has a small coal terminal but something much larger is required. As a result, Gaborone is looking closer to home for a likely shipping point: westwards to Walvis Bay or eastwards to Mozambique.
The Trans-Kalahari Railway would connect Botswanan and Namibian mines with Walvis Bay, while Botswana and Mozambique have signed a memorandum of understanding on the construction of a 1,100km railway from Botswanan coal mines through Zimbabwe to a new deepwater port to be developed in southern Mozambique at Techobanine. Botswanan coal exporters could also make use of other coal export terminals that either exist or are planned at other ports in Mozambique.