Tlou Energy (ASX: TOU) has been named a preferred bidder for the development of a coal bed methane (CBM) fuelled power project in Botswana.
The company today announced it has received written confirmation of its approval in the tender and will now work with the Botswanan government to finalise all the project agreements.
This achievement, ensuing from Tlou’s request for proposal submission in October last year, is a significant step forward for the company’s gas-to-power ambitions.
It follows other notable milestones including being awarded the first mining licence for CBM gas in the country, flowing gas from the Selemo pilot for about two years and generating electricity from the pilot gas for several months.
Tlou also established the first independently certified gas reserves in Botswana and has sufficient 2P gas reserves already in place to complete its proposed 10MW power project.
Tlou managing director Tony Gilby said the proposal was “very competitive” and approval of the tender represents “great progress” for the company.
“The effort put in by our team over recent years has been phenomenal and this result makes it all worthwhile,” he said.
“The company will now progress with additional work on the ground to deliver a gas‐to‐power solution that can bring significant benefits to the country and to our shareholders,” Mr Gilby added.
Tlou’s proposal submission was for the development of CBM-fired power plants up to a maximum of 100MW. It outlined a staged development starting with up to 10MW of power generation to facilitate the success of the downstream project by requiring relatively minimal upfront capital expenditure, thus reducing risk.
Based on the electricity price guide provided by the government in Tlou’s tender of about US$0.12 per kWh, a 10MW project could generate gross revenue of about US$10 million per year (A$14.47 million).
According to Tlou, this initial 10MW would be a pilot power generation project, with revenues potentially facilitating rapid future expansion.
By midday trade, Tlou shares were up 32.14% to $0.185.