Clean energy push could threaten Tshele Hills’ funding

Chakalisa Dube | Monday April 18, 2022 06:00

Securing supply: The Tshele Hills project will boost fuel security. Funds were previously provided through the National Petroleum Fund which was subsequently embroiled in a multi-million Pula fraud saga PIC: KENNEDY RAMOKONE

The 171 million-litres Tshele Hills storage project aims to increase the country’s strategic oil reserves from the current 18 to 60 days of supply without additional inflows of fuel.

The long-delayed project is among a group of investments at the top of government’s renewed push for Public Private Partnerships (PPP).

However, with the world moving away from any projects that may worsen carbon emissions, funding for the project is expected to be difficult to source.

“I do not know if international financial institutions will be very keen to run with the project because it is an oil project,” senior energy engineer at the Department of Energy Affairs, Baruti Regoeng said. “An oil project has a carbon footprint. “The project is a precarious situation, but we are just waiting to see what will happen.”

Regoeng was among the speakers at the recent Mining, Manufacturing and Construction Seminar in Francistown. Government is currently on the lookout for investors for the project which is expected to cost slightly over P3 billion.

When the idea to construct the Tshele facility was initiated, government planned to spearhead the funding and construction. The Kgatleng District project was initially financed through the National Petroleum Fund, but the latter’s depletion partly by an alleged money-laundering scandal, sent authorities scrambling for funds to finalise the project.

In 2019, government diverted P2.25 billion of the Botswana Power Corporation funds to the project. Originally conceived in 2012, the Tshele Hills project was due to have been completed by December 2020, to improve the country’s fuel supply security.

Botswana is already feeling the brunt of financial lenders who are shying away from funding energy generation that is not environmentally friendly. Last year, Maatla Energy pulled out from bidding to construct a 300MW coal-fired plant in the country. The company indicated that gaining access to funds for the project would not be easy as funders have adopted tighter restrictions on funding projects that have a high carbon footprint.

At the seminar, Regoeng revealed that government was progressing well with other fuel storage projects in Gantsi and Francistown.

“During the current financial year, government will float a tender for the construction of the Gantsi facility,” he said.

Construction of the Gantsi depot, which will have a capacity of 20 million litres, will cost the government P300 million. The expansion of the Francistown fuel depot will cost P600 million, raising capacity from 30 million litres to 95 million litres.

A Botswana Oil official recently stated that the Francistown project will take off during the current financial year.