Below reporter KABELO ADAMSON chats up with Mashale Phumaphi, Managing Director of Shumba Energy
It is known that Botswana is endowed with huge coal deposits, but it is projected that major coal consumers will slow down due to the growing shift to renewable sources of energy, how will Shumba Energy deal with this decline and to what extent can this affect your company?
MP: That is correct from a global perspective but for us targeting the regional energy deficit it is not so applicable because coal is still the only viable base source of electricity in our region of the continent. So although global consumption is affected by increased use of renewables, we are not in that position.
Do you believe the future is still bright in so far as developing coal projects is concerned?
MP: I believe that the future of coal remains bright. However it is quite essential for countries to look at an energy mix in order for Sub-Saharan Africa to achieve reliable base load electricity. Coal is going to play a substantial part; however there is room for other energy sources to take part as well.
There has been a global commodity price depression, coal included, how has the price decline affected the company’s projections?
MP: In terms of the global commodity price depression, because we are focused on power generation for domestic and regional consumption our price marker is really the regional electricity tariffs which have continued to be on the rise and in fact up to 300 percent over the last seven years, so I would not say that we have been significantly affected by the global depression in coal prices.
At the recent resource sector conference, you mentioned that there is a huge electricity deficit in the region, how is Shumba Energy positioning itself to take advantage of such deficit?
MP: In terms of our positioning to take advantage of the regional power deficit I believe it is very good. Botswana is very well connected to the region in terms of transmission, infrastructure, it is a good country in terms of credit rating and easy of doing business and therefore it makes it a great location to produce electricity for regional consumption. In addition Botswana has got substantial coal resources, meaning again it can produce cheap electricity for the region.
Apart from developing coal projects for electricity generation, is Shumba Energy also targeting other avenues of exploring the mineral?
MP: One of them which of course we are keeping in our minds is that as soon as the export market recovers we would be in a good position to export our coal and we have also looked at alternatives such as coal-to-liquids which we are actively looking for a partner to engage with us on as we are not experts in that particular technology. However, given the substantial coal resources we welcome alternatives to electricity generation.
Kindly share with us the projects that Shumba Energy is currently engaged in and their phases.
MP: We have two advanced coal projects, there is Mabesekwa Export IPP which is short-listed on the domestic Greenfield IPP programme and it is also targeting cross boarder opportunities. We have got the Sechaba Coal IPP Project, which is targeting the regional electricity demand. What is important to note is that both these assets have feasibility studies concluded on the core side and have roughly 1 billion tonnes of coal each. We are actively fast tracking both of these assets; we also have a UCG project that we are developing at Letlhakeng. It’s a UCG being Underground Coal Gasification so we are looking at it. It is an earlier stage project but we are looking at working on this project to take advantage of that opportunity.
There was once a mention that Shumba is looking into exporting to power to Namibia, kindly give us an update on the planned export.
MP: It is an avenue that we are still looking at and progressing, obviously there have not been any significant developments in that area and that is why we have not announced anything. We believe that in the future Namibia remains a potential market for our electricity.
Kindly share with us other projects that Shumba Energy is eyeing as a way of diversifying its portfolio.
MP: We are actively looking at developing solar projects. We have done quite a bit of work in that area and we are looking at other projects in the renewable sector and as I said, we are strong believers that the solution to the power deficit domestically and in the region is to have an energy mix and not just rely on one energy source.