Lesedi project proves costly

Baitshepi Sekgweng
RIGHT-HOPE: Gas-field-at-Nyamakatse-Ranch

Tlou Energy seeks to raise P92.6 million for the project

Tlou Energy’s Lesedi power project has proven to be a costly exercise as the the financial demands that comes with the development of the coal bed methane electricity generation plant continues to go up.

As the first phase of the project slowly takes shape, Tlou Energy seeks to raise up to P92.6 million for the project.

As a result, the Botswana Stock Exchange(BSE) listed entity seeks to offer 304 156 361 new offer shares to raise the amount which is necessary to the successful completion of the power project. Once complete and operational, the power plant is set to generate yearly revenue of P100 million .

This just comes a few weeks after ILC Investments extended a A$2 million (P17.69 million) loan to Tlou Energy as part of their continued support of Tlou’s projects. ILC is already Tlou’s largest shareholder having provided A$7.5 million (P66.21 million) in capital via previous share placements.

ILC has already indicated its willingness to continue providing funding support to assist the company to reach its goal of connecting to the power grid and earning first revenue through the sale of electricity in Botswana. The Lesedi Power project is part of the 100MW gas to power project under the Integrated Resource Plan and already Tlou has secured a power purchase agreement deal with Botswana Power Corporation (BPC) to supply 10MW of electricity to the local power utility.

With an area of over 9000 square kilometers, 25 years mining license and a tried and tested gas flow, a further opportunity in power sales presents itself for Tlou Energy. Eskom’s power struggles and Morupule B’s recurring power defects as well as BPC’s exercise of connecting cross border villages to the national grid also offer a chance to Tlou Energy to scale up power generation.

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The funds from the sales offer are expected to go towards development of Tlou’s power project which include drilling of gas production wells, completion of transmission line and construction of substations to connect the Lesedi to the national grid, land purchase and construction of an operations and generation facility among others.

While gas continues to be produced at Lesedi 4 production pod, drilling of Lesedi 6 started in April with the main objective of increasing volume of gas available for electricity generation.

“Subject to raising adequate funds, plans are to order the first generator in the near term for delivery in 2024 with anticipated first electricity generation soon after. The funds sought will be prioritized to capital expenditure items to advance towards first power generation including completion of sub stations and connecting power lines. At the point of first electricity generation, project risk will be materially reduced by achieving this milestone,” said Martin Mclver in a statement.

As it stands, the ongoing construction and installation of a 100km 66kv transmission line stands at 69 percent completion and set to be completed in July. With plans already in motion to develop the generation site and sub stations, power is set to be delivered into the national grid by second quarter of 2024 as per the company targets.

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