BOL engages US investors for coal to liquids project

Mbongeni Mguni | Monday April 10, 2023 06:00

Known as the 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.

BusinessWeek has learnt that the local fuel parastatal’s transactional advisor for the Ikaegeng project, Hatch Africa, had engaged a local law firm, Minchin & Kelly to provide legal advisory services.

“The firm engaged their colleagues in DLA Piper USA to assist with scheduling of meetings in the United States with various entities of interest in the area of coal to liquids,” Minchin & Kelly managing partner, Terence Dambe told BusinessWeek in an emailed response. “DLA Piper, working with Minchin & Kelly, assists as and when it is mandated to do so by Botswana OIl. “In the case of the recent assistance provided in the US, the mandate was limited to assisting with the scheduling of meetings.”

Minchin & Kelly is a member of DLA Piper Africa whose members comprise independent law firms in Africa working with DLA Piper, an international firm.

Government has said it expects to attract investors for the project, despite the global disdain for fossil fuel projects. Minerals and Energy minister, Lefoko Moagi previously told BusinessWeek that investors who had blacklisted the fossil fuels were walking back on their positions.

Moagi said the simmering energy crisis in Europe and other regions had reinvigorated interest among investors who, rather than blacklisting fossil fuels, were partnering for the uptake of cleaner technology in the sector as well as greater monitoring of standards and emissions.

Dambe told BusinessWeek, Botswana Oil’s efforts with Ikaegeng were guided by the National Energy Policy which clearly stated Botswana's recognition of and commitment to its obligations under global climate change conventions.

“In this regard, Botswana Oil subscribes to the first high-level objective of the policy of diversifying the national energy mix by promoting renewable energy sources, especially solar and clean coal technologies. “Furthermore, it is worth noting that Botswana Oil is desirous of developing the project through the implementation of a tangible environment, social, and governance strategy in line with the United Nation’s Sustainable Development Goals. “The strategy will underpin all aspects of the project and demonstrate clear and quantifiable progress with emphasis on impact,” Dambe said.

With an envisaged 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.

The project has been on the cards for years, with Botswana Oil pursuing an initial list of 11 bidders in 2017, before eventually whittling this down to a shortlist of two companies. That effort was ultimately abandoned in July last year and replaced with a Public Private Partnership (PPP) where private capital would lead the initiative.

Botswana Oil was due to have floated a renewed Request for Proposals before the end of last year under the PPP model.