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Tlou Energy announces confirmation of tender approval

Published by , Editor
World Coal,

Tlou Energy Limited can confirm that the company has now received written confirmation from the government of Botswana that it has been chosen as a preferred bidder for the Development of a maximum of 100 MW of coalbed methane (CBM) fuelled power plants in Botswana.

Tlou's Managing Director Tony Gilby commented: "The approval of the company's tender represents great progress for Tlou. The proposal that we submitted was very competitive and we welcome this decision by the government. We look forward to working together to deliver a successful power project. The effort put in by our team over recent years has been phenomenal and this result makes it all worthwhile. 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. I look forward to updating the market as we continue to develop the project."

Request for proposal

In October 2018, the company submitted its comprehensive response to the request for proposal (RFP) for the development of a maximum of 100 MW of CBM fuelled power plants in Botswana.

The company's submission outlined a staged development commencing with up to 10 MW of generation as well as outlining project feasibility, proposed field development, installation of power generation facilities and supply of power into the grid in Botswana.

The RFP was assessed across three different criteria: compliance, technical and financial. Of the competing bidders, Tlou's proposal received the highest pass mark for the compliance and technical stage. The financial stage required the calculation of a levelised cost of energy (LCOE) for the project, with Tlou's proposal having the most competitive LCOE. This was possible due to Tlou's ability to operate efficiently using very experienced personnel coupled with the geological knowledge gained over many years of operating in Botswana. Upon successful completion of the initial project, the company would look to expand further.

An initial staged 10 MW development was selected to facilitate the success of the downstream project by requiring relatively minimal up-front CAPEX. This reduces risk and therefore limits the downside for Tlou, its shareholders and the government.

Tlou used the electricity guide price provided by the government in the company's tender of approximately US$0.12/kWh. At this price a 10 MW project could generate gross revenue of approximately US$10 million/yr.

Tlou considers the first 10 MW as a pilot power generation project. Revenues from this project could facilitate rapid future expansion, which could be enormous based on the Contingent Gas Resources already in place at Tlou's project acreage.

The transmission line component of the downstream power generation project represents the bulk of the CAPEX required and will be designed to transmit upwards of 20 MW of electricity into the grid.


The RFP approval is another very significant milestone for the company which include:

  • Establishing the first independently certified gas reserves in the country with enough 2P gas reserves already in place to complete the proposed 10 MW power project.
  • Flowing gas from the Selemo Pilot for approximately two years.
  • Generating electricity from the Selemo Pilot gas for several months.
  • Being awarded the first mining licence for CBM gas in the country.
  • Obtaining upstream environmental approval for over 200 production wells, water handling, seismic, gas gathering pipelines and a processing facility.
  • Successfully acquiring the first seismic programme in the country specifically targeting CBM gas.
  • Successfully completing two gas production pods (Lesedi 3 & 4) in early 2019.
  • Obtaining downstream environmental approval for 20 MW of gas fired power generation, coupled with 20 MW of solar, plus a transmission line to connect to the grid.

Additional achievements

  • Drilled numerous wells since Tlou operations commenced.
  • Tlou holds approximately 9000 km2 100% owned licence area, with enormous scope for gas reserve expansion.
  • The company has built an experienced in-county operational workforce.
  • Landholder agreements are either in-place or being finalised.
  • Botswana based investors are now the largest shareholder group in the company aligning the country's interest with that of the broader shareholder base.


The company's cash balance was approximately AUS$6.5 million at the end of March 2019. The company has no debt. The company is well funded through to 2H20 and has sufficient funds to carry out planned drilling and seismic activities, that have the potential to further increase existing gas reserves.

Downstream funding primarily relates to transmission lines, which will be designed to transmit in excess of 20 MW of electricity from the proposed power generation facility to the Serowe sub-station. This has the potential to make future generation expansion both rapid and low cost.

Tlou has already received indications of funding support from a number of existing strategic investors as well as from Botswana Development Corporation (BDC). The company will look to source the lowest cost of capital for the downstream development.

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