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Mmamabula project delay

15 December 2009 – Regulatory obstacles in South Africa have affected CIC Energy, the company that is developing the Mmamabula energy complex at the Mmamabula coal field in Botswana.  The company has decided to defer some financial, legal and engineering activities related to the projects as a result.

75% of capacity from the mooted coal-fired power station to be bought by Eskom is intended to lessen South Africa’s power capacity challenges.  Nevertheless, the slow pace of South Africa’s regulatory processes have been cited as a cause of great frustration which will now cause project delays.

The decision follows the release of the long-awaited integrated resource plan by the Department of Energy.

CIC said that the first plan would cover requirements for new electricity capacity for the three years until March 2013.

CIC Energy’s CEO has said: "Requirements for new generation capacity for later periods, being the period the company considers to be the relevant period for the Mmamabula energy project, will be addressed in a second integrated resource plan, which will be prepared following an extensive public consultation process that will commence in the first quarter of next year and is targeted for completion in the middle of next year .

"Based on the company’s understanding of the regulations, an approval of the Mmamabula energy project by the Department of Energy will only be possible following the completion and gazetting of the (second integrated resource plan) and then only for commencement of commercial operations no earlier than 2014," the company said yesterday.

The move will delay the financial close and commencement of construction. The company said it would, therefore, be prudent for it to delay some of its activities.