Project To Improve Botswana’s Fuel Security

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Government is in the process of securing a partner for the implementation of the planned Ikaegeng XTL Project which is expected to play a pivotal role in improving fuel security and independence.

The occasional closures of fuel refineries in South Africa is said to be affecting Botswana’s security of supply, as a land locked country that imports majority of its product from the country.

Speaking at the Interstate Oil Committee Conference held in Kasane recently, Botswana Oil Limited General Manager (Supply and Pricing) Okutule Masima said it is vital for Botswana to come up with some strategies to address the problem.

According to him the project that will take seven years to be commissioned will run at a cost ranging between P40 billion to P50 billion.

The project he said will entail the development of a coal-to liquids Facility (CTL) and a CTL Business, producing petroleum products primarily for the local market together with other downstream opportunities. He added that the technically complex project will also include coal gasification, fuel production, fuel storage, power generation and related infrastructure.

 “CTL Business comprises of off-take of liquid fuels by Botswana Oil Limited and the wholesale storage and distribution to government, commercial and retail outlets, it also comprises of possible export of fuels or by-products to neighbouring countries,” he explained.

Masima is confident that the project will significantly change the balance of payments in the country (fuel is typically 10-15% of imports by value). He added that the project will also diversify the local industrial landscape as well as create employment among other opportunities.

Meanwhile, Masima noted that they are currently developing and expanding local fuel storages to augment supply.

He highlighted that in October 2024 they intend to expand the Francistown Depot from a 38 million litre facility to a 98 million one. He said the project is part of the greater objective to meet government’s target of 60 days petroleum storage cover for the North East consumption envelope.

Masima added that government will also construct a 187 million bulk petroleum storage depot at Tshele Hills to meet its target of 60 days petroleum storage cover for the South East consumption. The depot is scheduled to be completed in December 2025.

For his part, Minerals and Energy minister Lefoko Moagi noted that there is a dire need to address the issue of impending energy poverty and climate change in the Southern African region in a more sustainable approach. 

He stated that the region has experienced issues of energy shortage and insecurity especially the power and fuel sectors and this has already had a higher negative impact in the respective member states economies and the region as a whole.

Moagi added that the Ukraine – Russia war has over-pressured the already over-whelmed energy security for the region, the world at large and this has had a negative impact on petroleum products supplies and prices.

“Some of the major impacts were particularly noted on the spiking of the product prices which resulted in increased unaffordability of the products by the consumers, most of our governments intervened by foregoing some of the levies and taxes imposed on sale of the products to assist consumers survive the tide,” Moagi said.

He stated that such interventions, although helpful they are however not sustainable as they compromise the key sources of revenue for governments to fund developmental projects.

The Interstate Oil Committee (IOC) which comprises of five Southern Africa Customs Union member states namely, the Lesotho, Swaziland, South Africa, Namibia and Botswana was established with an aim to maintain free interchange of goods between members’ territories and to ensure the continued economic development of the SACU region as a whole.

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