On Friday, the final development costs of Kibo Mining's Mbeya coal to power project (MCPP) in Tanzania, was granted a three-week extension due to the underestimation of the independent audit of the development costs incurred over several years, Creamer Media reported.
The extension was granted for the determination of the final development amount still due by China-based contractor Sepco III, as part of a redefined agreement for the progression.
The mining firm explained in a company statement: "In accordance with the revised agreement, Sepco III was afforded the opportunity to conduct an independent audit of the development costs incurred on the MCPP to date.
"In spite of a diligent effort made so far to get this done in time, the time allowed for this work proved to be inadequate given that the costs in question cover a period spanning several financial years."
Mbeya coal to power project close to financial close
Sepco III, the sole bidder for the engineering, procurement and construction (EPC) contract, will be responsible to build the coal power plant in return for refunding 50% of the total development costs on the project incurred by Kibo to date, Creamer media reported.
According to media, the final development cost amount, the total refund amount and the payment due date, will be concluded by 14 October 2016.
The revised date is "when Kibo and Tractebel Engineering will be meeting with Sepco III in Qingdao, China, to assess and review Sepco III’s progress in preparing the EPC bid for the power component of the MCPP," the mining firm stated.
Louis Coetzee, CEO of Kibo Mining, said: “Kibo is very pleased with Sepco III’s performance to date under the revised agreement announced on 25 August 2016, with all work streams related to the preparation of the EPC-bid currently on schedule or slightly ahead of schedule.
"Both parties however underestimated the amount of work involved in conducting the independent audit referred to above."
Louis added: "Kibo and Sepco III subsequently agreed that a delay in finalising this particular element of the agreement was not going to affect either party’s commitment and willingness to continue in parallel with the preparation and finalisation of the EPC-bid and it was therefore decided, by mutual agreement, to extend the date for final agreement on this matter.”