Studies for Ikaegeng XTL Coal-to-Fuel Plant Project in Botswana Finalized

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The feasibility studies for the much-anticipated US$ 2.5bn (P30 billion) Ikaegeng XTL coal-to-fuel plant have been completed, and plans are underway for the search for a private partner for the implementation of the project.

According to Botswana Oil (BOL)’s Senior Manager (New Ventures), Gamu Mpofu, the government of the southern African country has authorised the project to procure a development partner via a Request for Proposals.

Although 11 companies were shortlisted for the project following a prequalification tender in August 2017, BOL has since repackaged Ikaegeng as a Public-Private Partnership initiative.

Expectations for the Ikaegeng XTL coal-to-fuel plant project

The ambitious project, Ikaegeng XTL coal-to-fuel plant project, intends to tap into the country’s untapped billions of tonnes of coal, using technology to generate various petroleum products for domestic consumption.

It is expected to provide up to 80% of the country’s yearly gasoline demand of 1.2 billion litres and consequently reduce the country’s dependence on South Africa which has recently experienced a fast loss of refining capacity, with many of its big plants halted or nearing the end of their useful lives. According to BOL data, South Africa’s refining capacity fell from 703,000 barrels of oil per day in March 2020 to 303,000 barrels per day in March of this year.

According to BOL’s research, around 1,500 employment might be generated during the Ikaegeng XTL coal-to-fuel plant building phase, with 1,420 jobs produced throughout the plant’s operating phase. The facility might also generate more than P1 billion in taxes for the government each year.

Fuel from Ikaegeng would be purchased by BOL and others and then resold at a wholesale level to commercial or retail establishments throughout the country under the proposed PPP framework.