World Bank Financing for Continued Growth, Enhanced Poverty Reduction in Botswana

The World Bank’s Board of Executive Directors today approved a US$136.4 million loan for the Morupule ‘B’ Generation and Transmission Project, a direct response to requests from the Government of Botswana to support its drive for energy security. The Board also approved a Partial Credit Guarantee of US$242.7 million of commercial bank financing for the project. The financing will help secure a reliable electricity supply for the country’s economic growth and poverty reduction programs. Financing will also help Botswana prepare a robust low-carbon growth strategy (consistent with the current Tenth National Development Plan: 2009-2016), strengthen management skills in the power sector, and establish a new, independent electricity regulator.

In considering the financing proposal, the Board of Executive Directors noted Botswana’s strong commitment to democracy and development and its remarkable successes in achieving economic growth and poverty reduction through prudent management of its mineral resources. Botswana currently imports almost 80% of its power from South Africa, which is being scaled down and will stop completely in 2012 due to growing energy shortages in South Africa and the region.

President Seretse Khama Ian Khama has stated that without new sources of electricity, “the economic development of my country would be seriously compromised … The living standards of Botswana would be in serious jeopardy on account of fewer job opportunities, as well as the lack of resources with which to improve programmes in nutrition, maternal and child health, HIV/AIDS, health, sanitation, education, and other social services”. President Khama also has stated that his Government “is fully committed to the Kyoto protocol and to playing its part in the reduction of Green House Gas emissions…..clean energy technologies are given prominence in the current National Development Plan”.

The project that the World Bank is supporting will see the construction of the 600 megawatt Morupule ‘B’ coal-fired power station, accompanied by related transmission lines and a water supply system. Moreover, the project will support the country’s evolving low-carbon growth strategy, including fast-track exploration of alternatives such as coal-bed methane (CBM), concentrated solar power (CSP), and new, emerging technologies such as carbon capture and storage. In addition, the financing will provide for the establishment of an independent energy regulator, and also help to improve project implementation capacity at Botswana Power Corporation and the Botswana Ministry of Minerals, Energy, and Water Resources.

“Botswana needs to act swiftly to ensure its energy security, and ensure economic growth and diversification,” said Obiageli Ezekwesili, World Bank Vice President for the Africa Region. “With only half of the Botswana population having access to electricity, the Morupule’B’ project will help to not only increase generation capacity and access but also serve as a down payment for a greener future.”

The World Bank has established strict selection standards under its Strategic Framework for Development and Climate Change for projects such as Morupule B. These include examining how to optimize energy sources by considering the possibility of meeting the country’s needs through energy efficiency and conservation; consideration of viable low-carbon alternatives to least-cost options and verification that projects use the best appropriate available technology to allow for higher efficiency and lower greenhouse gas emissions.

“Achieving energy security is a national strategic priority for Botswana,” said Ponatshego Kedikilwe, Botswana’s Minister of Minerals, Energy, and Water Resources. “The Morupule ‘B’ project is essential for boosting energy generation capacity, catalyzing economic growth, and reducing poverty.”

The project, which was developed through an extensive consultation process in Botswana at the local and national level, will help the Government of Botswana move to a lower-carbon growth path in the medium-term, potentially harnessing solar energy from the Kalahari Desert, developing coal-bed methane as an attractive low-carbon energy resource, and exploring promising options for carbon storage in Botswana’s favorable geological structures. This approach has the potential to have a demonstration effect for mitigating climate change in the region.

The solution adopted responds to the immediate needs of the people of Botswana” said Ruth Kagia, World Bank Country Director for Botswana. “But the project also supports Botswana’s determination to step up efforts to address climate change mitigation and adaption."(EOM)