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FM AMEMBASSY GABORONE
TO RUEHC/SECSTATE WASHDC 5576
INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHJO/AMCONSUL JOHANNESBURG 0928
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEAIIA/CIA WASHDC
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RHMFISS/HQ USAFRICOM STUTTGART GE
RHEBAAA/DEPT OF ENERGY WASHDC

UNCLAS SECTION 01 OF 02 GABORONE 000138 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG ECON ETRD BC
SUBJECT: BOTSWANA: U.S. COMPANY MAY PROVIDE TEMPORARY POWER 
SOLUTIONS 
 
GABORONE 00000138  001.2 OF 002 
 
 
SENSITIVE BUT UNCLASSIFIED.  NOT FOR INTERNET DISTRIBUTION. 
REPORT CONTAINS PROPRIETARY BUSINESS INFORMATION. 
 
¶1.  (SBU)  SUMMARY: DCM and Pol/Econ Chief met February 19 
with Paul Marcroft of Florida-based APR Energy regarding the 
company's proposed short-term contract to generate 70 
megawatts of electricity for the Botswana Power Corporation 
(BPC).  The contract, which is not yet signed and has been 
under discussion since October 2008, would last for 15 months 
with possible renewal up to 3 years.  Under the proposal, APR 
could deliver equipment and begin generating 35 MW for BPC as 
soon as October 2009.  The U.S. company is hopeful that 
Botswana will continue with the agreement despite the drop in 
regional electricity demand due to the global economic 
crisis, which has caused reductions in power usage especially 
in the mining and manufacturing sectors.  APR's lawyers and 
the BPC are still working out details regarding taxation for 
the deal.  END SUMMARY. 
 
¶2.  (SBU) Paul Marcroft, Director of Business Development for 
APR Energy, a small U.S. company based in Jacksonville, 
Florida, told Embassy officers February 19 that his company 
had been awarded a tender by Botswana's electricity utility 
BPC in October 2008.  Under the terms of the agreement, APR 
is to provide an array of industrial generators that would 
supply 70 MW of power to BPC on a short-term basis.  The 
contract duration would be for 15 months, renewable up to a 
period of three years.  APR Energy specializes in short-term 
power projects and reports that they can typically deploy 
equipment and have it operational in 30-60 days.  They 
currently have similar projects in Peru, Costa Rica, and 
Argentina, and are trying to develop additional business in 
the African market.  Botswana sought out short-term 
generating capacity as it realized the country would be hit 
hard in 2009 and beyond as regional electricity demand 
continued to outstrip supply, and Botswana and other 
customers of South Africa's Eskom began to suffer rolling 
power cuts.  Though Botswana has two power projects underway 
(the Morupule B expansion of an existing coal-fired 
generating station near Palapye and the prospective Mmamabula 
project) which if completed will make the country 
self-sufficient and potentially a net electricity exporter, 
neither project is expected to be operational before 2012. 
Botswana faces an energy deficit in the next 2-4 years, 
especially as South Africa's power company Eskom is scheduled 
to reduce its supply to Botswana by 100 MW in 2010. 
 
¶3.  (SBU) APR's proposal for Botswana consists of two phases. 
 Initially, the company would provide 35 MW of power, and 
then in a second phase several months later, add additional 
capacity to generate a total of 70 MW.  To achieve this, APR 
deploys as many 1-2 MW generators as are needed, installs 
them quickly, and then they are fueled and operated by the 
customer.  The project in Botswana will be located 
approximately 20 kilometers east of Francistown, adjacent to 
the Tati nickel mine.  At the end of the contract, APR would 
simply remove its generators and redeploy them to another 
location. 
 
¶4.  (SBU) Marcroft indicated that APR is eager to finalize 
and sign its Botswana contract.  Most of the terms were 
agreed upon in late 2008, and BPC initially wanted APR to 
begin generating by April 1, 2009.  However, in late 2008 BPC 
put the brakes on negotiations, and explained to APR that 
given the global economic crisis and reduced electricity 
demand in the region, the utility would need to re-think the 
idea of procuring temporary generating capacity.  According 
to Marcroft, BPC then gathered data about projected power 
usage, the mining situation, and other factors to attempt to 
justify the proposed expense to its parent ministry, the 
Ministry of Minerals, Energy, and Water Affairs.  After that 
review, BPC told APR that they would like to go forward with 
the deal, and that under the agreement APR should begin phase 
one, generation of 35 MW, in October 2009, and by the end of 
2009 be at the full 70 MW capacity. 
 
¶5.  (SBU) APR had hoped that BPC would be ready to sign the 
agreement this month.  However, BPC says that they will not 
be able to sign until May 1.  APR is hoping to use pricing 
incentives to get BPC to sign sooner.  Marcroft reports that 
the current deal is for a fixed rate of US$ .03/kwh for the 
first year, with incremental increases if the contract is 
extended.  However, APR says that it has told BPC if the 
 
GABORONE 00000138  002.2 OF 002 
 
 
contract on offer is not signed by BPC by March, it will 
raise the pricing structure by 5% in April and by 10% in May. 
 The largest remaining issue with the deal is taxation. 
BPC's tender indicated that the utility would be responsible 
for all taxes, but they have not yet worked that out with the 
Botswana taxation authority BURS.  Lawyers for APR and BPC 
have drafted a letter to BURS this week seeking guidance on 
what taxation might be applicable to this deal.  They are 
then hoping to get an exemption, either from BURS or from the 
Ministry of Finance.  APR has no plans to incorporate or hire 
staff in Botswana.  Their agreement with BPC will be 
essentially only for short-term provision of equipment, with 
some installation and maintenance.  All equipment will be 
re-exported at the expiry of the deal. 
 
¶6.  (SBU) COMMENT: The power crisis in Southern Africa has 
been delayed but certainly not averted by the global 
recession.  It is good to know that the GOB is pursuing 
options which might allow Botswana to minimize or even avoid 
the power shortages it began to experience in 2008.  Lack of 
reliable power supply has the potential to derail new 
investments and economic development projects, so Botswana is 
wise to try to "bridge the gap" between its past reliance on 
Eskom and possible future self-sufficiency in 2012 and 
beyond.  Post will keep in touch with APR and try to support 
the entry of a new U.S. company into the Botswana market, 
especially one which will fill such a critical regional need. 
 END COMMENT. 
NOLAN