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Department of Mines gives Tlou another prospective license

The Department of Mines has given the Australian Securities Exchange, London's AIM market and the Botswana Stock Exchange listed energy company Tlou Energy Limited a  new prospecting license PL011/2019 designated Boomslang is valid for an initial term of three years.

The license covers ~1,000 Km2, bringing the total licence area held by the Company to ~9,300 Km2. According to Tlou Energy, the Boomslang area was considered highly prospective and provided significant potential development flexibility. Boomslang is located on-trend with the Lesedi Coal Bed Methane Project, where independently certified gas reserves are already in place.

According to the company, the initial development operations ongoing at the Lesedi gas field, the award of the adjacent Boomslang area along with the Mamba area provides the Company with further flexibility and optionality. The Lesedi Coal Bed Methane project is one of two projects Tlou has in Botswana and comprises five CBM prospecting licences

"I am very encouraged by the recently completed drilling program and in particular the strong gas indications observed to date. Furthermore, the good initial water flow, which is higher than that previously observed at Selemo, is potentially indicative of good permeability and therefore potentially good gas flows in this geologically high-graded area,” said Tony Gilby, Tlou managing director.

Recently Botswana government approved the 100 MW CMB tender in relation to “request to open Financial Proposal in respect of Tlou Energy Limited and Sekaname (Pty) Ltd who achieved technical scores of 89.8 percent and 86.4 percent respectively in the tender Development of a Maximum of 100MW of Coal Bed Methane Fueled Pilot Power Plants in Botswana.” The tender numbered Tender No: WOR 0/7/11/3-1 which was approved by the Board that time was submitted few weeks ago to PPADB as Tlou proposal received a technical score of 89.8 percent in the tender while Sekaname was scored a little bit low at 86.4 percent.

The Botswana government approval of the tender came after last year the Ministry of Mineral Resources Green Technology and Energy Security (MMGE) issued a Request for Proposal (‘RFP’) and opened a tender for development of a maximum of 100MW CBM fuelled power plants in Botswana by companies; Tlou Energy Limited and Sekaname (Pty) Ltd.  After the two companies submitted their bids, the government then decided to cancel the original RFPs and approved re-tendering through Public Procurement and Assets Disposal Board (PPADB) by Tlou and Sekaname this year February.

“This proposal is for the development of CBM fuelled power plants up to 100MW.  A successful RFP process can assist in the development of a new CBM gas industry in the country and create a new market for Tlou's independently-certified gas reserves of ~41 billion cubic feet (2P), ~427 billion cubic feet (3P) and significant contingent gas resources of ~3 trillion cubic feet (3C),” said Tlou Energy when receiving the tender.
 

Tlou Enrgy had waited for months for this tender with losing patience with its group CEO Martin McIver going to and fro to meet Minister of Mineral Resources, Green Technology and Energy Eric Molale inquiring and negotiating about the tender.  Last year in an interview with renowned financial news platform Proactive Investors’s Andrew Scott, Tlou Energy Executive Director Gabaake Gabaake said he is positive that the tender will be implemented as the company’s directors have been getting positive feedback from government or the ministry recently.  He said this is going to be a major project will open more.

Finally PPADB approved the request from Ministry of Mineral Resources, Green Technology and Energy Security (MMGE) to open the financial proposal in relation to the Tlou Energy's gas to power tender. Recently Tlou Energy Limited, was focused on delivering power in Botswana and Southern Africa through the development of CMB, it has commenced production testing at its Lesedi 3 development pod.  

According to Tlou, the excellent progress was being made on drilling operations at the second development pod, Lesedi 4. The company said the first half of 2019 should see significant advancements towards achieving one or both of these objectives. Lou further said testing procedures will continue over the coming months with initial performance data expected in Q2 2019. In its latest financial report, Tlou said it spend on exploration activities during the period amounted to P30 million and according to the company, this is an increase on the comparative period and relates mainly to the development wells that were commenced during the reporting period.

According to the company, Tlou Energy believes as 100% owner of the most advanced gas project in the country, the Lesedi CBM Project, it will provide investors with access to a compelling opportunity using domestic gas to produce power and displace expensive diesel and imported power. Botswana has a significant energy shortage and generally relies on expensive imported power and diesel generation to fulfill its power requirements.

Experts predict that Botswana’s power demand is to increase by 37 percent to 1,017MW by 2025. The Australian Securities Exchange, London's AIM market and the Botswana Stock Exchange listed company touted itself as coming to save Southern Africa from the chronic shortage in the region.

Tlou is developing projects using coal bed methane ("CBM") natural gas and Botswana has a significant energy shortage and generally relies on expensive imported power and diesel generation to fulfill its power requirements.  As 100 percent owner of Lesedi CBM Project, Tlou Energy provides investors with access to a compelling opportunity using domestic gas to produce power and displace expensive diesel and imported power.

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Botswana on high red alert as AML joins Covid-19 to plague mankind

21st September 2020
Botswana-on-high-alert-as-AML-joins-Covid-19-to-plague-mankind-

This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.

The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.

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Finance Committee cautions Gov’t against imprudent raising of debt levels

21st September 2020
Finance Committe Chairman: Thapelo Letsholo

Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.

He was speaking in  Parliament on Tuesday delivering  Parliament’s Finance Committee report after assessing a  motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.

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Gov’t Investment Account drying up fast!  

21st September 2020
Dr Matsheka

Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.

The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.

The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.

The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.

This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.

Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.

Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.

However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.

Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.

When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.

This  as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.

Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.

The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.

Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.

In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.

Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.

Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.

Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.

Acknowledging the need to draw down from GIA no more, current Minister of Finance   Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”

He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”

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