Gov’t confident as P30bn synfuels project gathers pace
Government is confident of securing private capital for the $2.5 billion (P30 billion) coal-to-liquids project, with Minerals and Energy minister, Lefoko Moagi saying investors who had blacklisted the fossil fuels were walking back their positions. Known as Ikaegeng XTL (Coal-to-Liquid), the ambitious synfuels project aims to use the billions of tonnes of coal lying untapped in the country to produce various petroleum fuel products for domestic use.
Botswana Oil expects that the envisaged plant could produce 12,000 barrels of oil per day or up to 80% of the country’s annual fuel demand of 1.2 billion litres.
With a lifespan of 30 years, 1,500 jobs created during the construction phase, 1,420 jobs during the operational phase, and more than P1 billion per annum in various taxes to government, the Ikaegeng XTL is set to be a major economic game-changer for the country.
Moagi told BusinessWeek the ongoing crisis in Europe and other regions had reinvigorated interest amongst investors who, rather than blacklisting fossil fuels, were partnering for uptake of cleaner technology in the sector as well as greater monitoring of standards and emissions.
From 2017, Botswana Oil pursued an initial list of 11 bidders and eventually a shortlist of two companies to develop the project, before eventually abandoning the effort in July last year and transforming it into a Public Private Partnership (PPP) where private capital would lead the initiative. Botswana Oil is due to float a renewed
Request for Proposals before the end of the year under the PPP model. Moagi said the energy crunch in Europe and other regions had shown investors that a smoother energy transition was required.
“Look at Europe who are sending vessels coming down to Africa to get coal,” he said.
“If you really believe that you can just quickly move away from these fossil fuels without any consideration to go back, why are you now bringing vessels to Africa? “You have to balance between cleaner technologies, between ensuring that the carbon emissions are reduced but it can’t just be a clean sweep because you will plunge people much more into crisis than you were
actually trying to avert.” Moagi added: “People came back from that moratorium on financing of fossil technology.
Some people have come back to do that because we believe that if we employ cleaner technologies that reduce emissions and it is manageable and can be tracked and monitored, then it ought to be allowed.” According to the country’s climate change policy adopted by legislators, Botswana’s greenhouse gas emissions were last measured at five percent of Africa’s total emissions in 2000.
The continent produces about four percent of global greenhouse gases, a fact frequently cited by African policymakers who feel unfairly rushed by the rest of the world into the green transition. Botswana has committed to the United Nations Framework Convention on Climate Change to lower its greenhouse gas emissions by 15% in the years to 2030. However, Moagi said this commitment did not mean switching off from other fuel sources.
“A week after the climate change conference in Glasgow, there was over 80,000 square kilometres of land that the US was actually pushing for exploration of oil,” Moagi said.
“They even went on to do new partnerships with the likes of Saudi Arabia.
“So, there’s no moving away just like that whereas people have to live.” From the current near-total reliance on coal-fuelled electricity, Moagi said the country was fast-tracking the adoption of renewables in its electricity consumption from an initial target of 15% by 2030, to 30%.
“The underlying thing is that the transition must be just and what was agreed.
“That 30% is just on the government side and when the private sector does its part, that figure will be higher. “We believe renewables will do that, especially with the abundance of sunlight in Botswana and we are also concluding the restating of our wind studies which were once done in 2013.
“This is just to see which areas in Botswana have more wind potential so that wind can also come into the renewable space,” he said.
The government is also kicking off a national energy usage study on November 1 which will identify areas within the country where off-grid renewable solutions can be employed, such as solar and biogas.