Citizens to get share in Tshele Hills project
Mbongeni Mguni | Monday October 3, 2022 09:26
The long-awaited project is being done as a Private Public Partnership (PPP) and the winning bidder will be required to set up a Special Purpose Vehicle (SPV) to enter into agreements with the Ministry of Minerals and Energy and Botswana Oil (BOL).
Estimated at P3 billion, the project entails the construction of facilities and associated infrastructure that will boost strategic storage capacity in the South from 25 million litres to about 171 million litres.
The higher capacity is equal to 60 days of supply to the economy without imports, compared to the current 18 days.
The tender is open to local and international companies, but the SPV has to be registered in Botswana, Johan Louw, lead transaction advisor to the BOL, told BusinessWeek on Wednesday.
“The minimum set aside for citizens is five percent in the SPV and the participation can be 50% or 100%, but that’s the minimum,” he said during a briefing for potential bidders. “Participation by citizens will also be in the design, construction, and operations. “There are various areas to participate in but we are not prescribing that at the moment and more details will be made at the Request for Proposals stage. “At the moment, we want to see if the bidder is strong enough for the project technically and financially.”
BOL floated a Request for Qualification earlier this month, which will be narrowed into a Request for Proposals next January. Negotiations with the selected bidder are due by September 2023 with construction starting in 2024.
The oil parastatal expects operations at Tshele Hills to start in 2025.
Originally conceived as early as 2010, the Tshele Hills project was due to have been completed by December 2020, to improve the country’s fuel supply security. Government-funded construction of a four-kilometre road and 14-kilometre railway line to the project site as well as bulk earthworks before running out of funds and transforming the project into a PPP.
BOL chief executive, Meshack Tshekedi said Tshele Hills’ expansion was part of an effort to boost oil storage around the country. The parastatal is also expanding the Francistown storage from 35 million litres to 95 million litres, while the Gantsi facilities are being upgraded to 20 million litres.
“The idea is to improve the capacity of storage and also diversify the sources of supply with Francistown potentially being supplied from Mozambique, the Gantsi storage from Namibia and the Tshele Hills from South Africa,” he told the briefing. “This is however dependent on pricing and logistics competitiveness.”
Nationally, the country’s existing strategic oil reserves have a capacity of 62.5 million representing about 18 days of supply without additional imports and based on the current annual consumption of 1.2 million litres of different fuels.