Tlou Energy has announced it is in negotiations with Botswana Development Corporation (BDC) to provide the initial capital required to start production at its Lesedi Coal Bed Methane (CBM) project.
In an update to stakeholders this week, the company revealed they expect to receive a funding proposal from BDC in the near term.
Tlou is aiming to become the first enterprise to produce gas-fired energy in Botswana.
The two are currently discussing the virtues of BDC providing up to US$30 million (P300 million) to develop the first 10 Megawatts (MW) of the Lesedi Gas-to-Power project, with a minimum of US$10 million (P100 million) required to connect 2MW to the grid.
Tlou further noted it is in discussions with other potential sources of funding should the agreement with BDC not materialise in a timely manner.
It claims to have received expressions of interest from third parties.
In September 2018, Tlou submitted a proposal to government for the development of a CBM Gas-to-Power plant.
It was subsequently selected as the preferred bidder for the project but is still awaiting further progress regarding the negotiations with government.
This led to Tlou admitting progress has been slower than expected, particularly in relation to Power Purchase Agreement (PPA).
It, however, hopes the lengthy wait taken to advance a PPA will be resolved soon following the appointment of the new Minister of Mineral Resources, Green Technology and Energy Security, Lefoko Moagi.
Tlou explained the PPA timetable is not under its control but noted it continues to seek progress wherever possible to ensure the project remains on schedule to benefit not only its shareholders, but also the local population.
It is believed the population will profit from the development of a new industry through employment opportunities and a cleaner source of locally produced power, which will result in energy security for Botswana.
In addition to its target of becoming the first producer of Gas-to-Power in Botswana, Tlou is also looking into solar power production.
It is considering the merits in financing a concept of ‘low carbon power bond’.
This is because it is believed that solar energy, which wields strong interest in Botswana, works efficiently when supported by gas-fired base load power.
Besides the existing environmental approval for up to 20MW of gas-fired power generation, Tlou also has approval for up to 20MW of solar power generation.