UPDATE 1-Botswana power project costs could top $10 bln-AfDB
June 4th, 2008 | by admin |(Adds detail, background)
CAPE TOWN, June 4 (Reuters) - The African Development Banksaid on Wednesday that the cost of Botswana’s giant Mmamabulaenergy project could rise way above $10 billion from a previousestimate of $9.5 billion.
“The project costs have been going in one direction and thatis upwards and so I personally won’t be surprised if it ends upbeing higher than $10 billion,” Tim Turner, director of privatesector and microfinance development at the AfDB, told delegatesat the World Economic Forum conference in Cape Town.
The project, which includes a coal mine and two 2,500megawatt power stations, is situated in southeast Botswana onthe border with South Africa and was initially slated to cost inthe region of $6 billion.
The project is being developed jointly by Canada’s CICEnergy Corp (ELC.TO: Quote, Profile, Research), International Power Plc (IPR.L: Quote, Profile, Research) fromBritain and Japan’s Sumitomo.
Uncertainty over the final costs were fuelling the fundingcrunch, said Turner, adding that the equipment supply market forthe energy sector was “extraordinarly tight” given a globalpower shortage.
Turner said the AfDB, which has suggested that the Mmamabulascheme form part of the banking group’s new African FinancingPartnership, was hopeful it could commit funding in the nearfuture.
“The challenge on this particular project is just now how tomobilise that amount of financing given the global creditcrisis,” said Turner of the project which would provide 75percent of its power generated to South Africa and the remaining25 pct to Botswana.
South Africa, one of Africa’s strongest economies, is in themidst of an energy crisis which has scared investors and hit themining sector amid regular blackouts.
