The 300 megawatt (MW) expansion of two units at Botswana’s Morupule B coal fired power plant has been delayed due to a dispute with the contractor over an $800 million guarantee, a cabinet minister said on Wednesday.
Japan’s Marubeni and South Korea’s Posco Energy were last year awarded the contract for the expansion, but a row between them and the government over a sovereign guarantee has delayed the plant’s expansion.
The minister of energy Security and Green Technology, Sadique Kebonang, said the builders were due to start work in January but demanded the payment of a $800 million guarantee in case the loss-making Botswana Power Corporation failed to pay.
Kebonang said only parliament, which is on a recess until July, can approve such a payment.
Officials at Japan’s Marubeni and South Korea’s Posco Energy were not available to comment.
The plant would eventually generate a total of 1,200 MW when all the expansions are completed by May 2020.
The government hopes to export power to other countries in the region after the expansion is completed.
The coal-fired power station was originally built by the China National Electric Equipment Corporation (CNEEC) at a cost of $970 million but has often broken down, leading to a reliance on diesel generators and imports from South Africa.
($1 = 10.5932 pulas)
(Reporting by Brian Benza; Editing by James Macharia)