Botswana to Name Developer of $4 Billion Plant by December

(Bloomberg) -- Botswana Oil Ltd. will decide by December on a company to build and operate a $4 billion coal-to-liquids plant, a facility it said may meet as much as 80 percent of the southern African country’s fuel demand.

The state-owned oil firm received 11 bids by its August deadline and is subjecting them to “highly technical assessments,” spokeswoman Matida Mmipi said Monday by phone from the capital, Gaborone. She declined to name any of the companies competing for the tender.

“The coal-gas to liquids project, if implemented, will ensure the security of supply of petroleum products for Botswana as the country will be able to produce its own fuel to augment what it imports,” Mmipi said, estimating national fuel demand at 1.2 billion liters per year. Some other demand will be met with renewable energy, including biomass and bio-diesel projects, she said.

Botswana is seeking to diversify its economy away from diamonds, its biggest export, and reduce its reliance on fuel from neighboring South Africa, which supplies more than 90 percent of demand, leaving the country vulnerable to shortages in the event of labor strikes. At the same time, it’s trying to take greater advantage of its more than 212 billion metric tons of estimated coal reserves.

The new plant can “greatly support the country’s economic diversification drive, creating jobs, reducing our import bill and the monetization of coal reserves,” Mmipi said.

Botswana produces about 3 million tons of coal a year, nearly all of which is consumed by domestic power plants. Plans to export the mineral have been stymied by the lack of a viable route for the landlocked country and a 2012 government report on the coal industry said CTL was a priority.

The request for expressions of interest in June said the chosen bidder would have to fund the construction and operation of the CTL, with Botswana Oil making a long-term commitment to buying the fuel produced.

To contact the reporter on this story: Mbongeni Mguni in Botswana at mmguni@bloomberg.net.

To contact the editors responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net, Michael Gunn, Paul Richardson