AfDB Approves € 153 Million for Botswana Power Project

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Tunis, 29 October 2009 – The African Development Bank (AfDB) Group Board of Directors on Wednesday, 28 0ctober 2009 in Tunis, approved a loan of € 153 million to the Government of Botswana, to finance specific components of the Morupule B power station and associated transmission infrastructure.

The project involves the construction of a 600-MW (4 x 150 MW) coal fired power plant and associated transmission infrastructure. The Morupule B plant will be located adjacent to the existing Morupule A plant, and connected to the national grid by two new transmission lines.

Designed to help the country achieve energy self-sufficiency, the project will, on completion, support economic growth and reduce poverty. Botswana has, until now, relied on the importation of electricity to meet its growing demand (500 MW in 2008 and around 600 MW projected for 2012). In 2008, 80% of the electricity supplied in Botswana consisted of imports from neighbouring countries, notably from South Africa. The remaining 20% was generated by the country’s Morupule A, a 25-year-old plant.

However, as a result of the acute energy crisis in the region, neighbouring countries are rapidly reducing exports to Botswana, and the country has been forced to resort to load shedding since 2008. Imports will be further reduced in coming years and are expected to be fully discontinued by 2013. 

The Morupule B project will help in the realization of the government’s strategy to increase household access rates from 47% to 80% by 2016. The project will also be beneficial to the region as a whole, since it will enable Botswana to become a net energy exporter by 2014.

The project is estimated at US$ 1.4 billion (UA 905.4 million). The AfDB is providing 15% of the project cost. The other contributors include China’s ICBC Standard Bank (59%), the Government of Botswana (15%) and the World Bank (11%)

As an upper-middle income country, most of Botswana’s traditional donors had reduced the level of their assistance to the country. It is only recently, due fiscal deficit stemming from a contraction in economic activity, that the government started re-engaging with Development Finance Institutions (DFIs) for support. It is in this context that the AfDB approved a US$ 1.5 billion Economic Diversification Support Loan to the country in June 2009, the largest loan ever granted by the Bank.

*1 Unit of Account (UA) = $ 1.58 as at October 2009

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