Morupule land dispute to cause P200m per month losses
Brian Benza | Tuesday July 25, 2017 18:00
MCM is locked in a dispute with six of the 166 farmers who hold land rights to the area that the company intends to build a new 1.35 million tonnes per annum coal mine to feed into the planned 300MW power station at Morupule B (Unit 5&6).
In a blistering statement, in which the company accused the NLB of unjustifiably inflating land prices, MCM said allowing compensation to be set at such extortionate levels sets a dangerous precedent for future projects that are, like Morupule B, necessary for Botswana’s economic development.
“The vast majority of farmers accepted the compensation values computed in terms of the guidelines adopted by the Ministry of Lands for use by land boards, which were verified and supported by two independent valuations conducted by experts instructed by MCM. Those farmers have now been paid in full. However, about six of the farmers did not accept the compensation values.
“The NLB, with the assistance of the Ministry of Lands, then engaged with the dissenting farmers and then subsequently revised the assessments which resulted in a substantial increase of the values assessed for the dissenting farmers only.
“MCM objected to the revision of the assessments on a number of grounds and this resulted in a dispute and attempts to resolve matters by referral to arbitration have been futile as both the farmers and the NLB rejected proposals for same,” said MCM communications specialist, Boineelo Seitshiro.
At the centre of some of the MCM’s objections to the revaluations are that not only was there an unwarranted departure from the principles that formed the basis for agreement with the other 160 farmers, but the Mine’s representatives were also excluded from crucial meetings where the compensations were revised. “The compensation rates used were significantly higher than the rates used regularly in the market. For example, the rates used to assess brick and mortar properties was, in the case of some farmers, more than five times greater than market value.
“By way of example one of the farmer’s compensation amount was, without any justifiable basis adjusted upwards from P 8.4 million to P 26.2 million,” said Seitshiro.
The MCM also alleges that at least one of the officers involved in the preparation of the revised assessment appeared to be conflicted while some of the farmers’ claims have significant arithmetic errors and appear to be duplicated. The new mine is supposed to supply coal to a new power station at Morupule B whose construction has also been delayed due a dispute between government and the Independent Power Producers (IPPs).
Japan’s Marubeni and South Korea’s Posco last year won a tender to build Unit 5 & 6 at Morupule B power plant but works, which were due to start in January this year, have been delayed after the joint venture said it required a P8 billion sovereign guarantee from the government for it to secure funding from banks.
According to Seitshiro, any further delays to the project will have significant cost consequences for MCM and other parties involved in the project with the coal mining company set to incur costs of P30 million per month for late delivery of coal.
The IPP can also claim upto P60 million per month from Botswana Power Corporation (BPC) for late delivery of coal while government will have to pay upto P97 million per month to continue importing power.
MCM and Marubeni have already signed a 30-year coal sales agreement to supply the new power station.
Unit 5 & 6 power plants are due to become Botswana’s first IPPs projects where the Asian joint venture would build the plants at their own cost and recoup their investments from selling the power to BPC over a 30-year period at P812 per Kilo Watt hour (KWH).
During construction stage, the mine is expected to employ between 600 and 700 workers with about 350 workers retained when the mine is operational.