Tlou Energy (TLOU) announced this morning that a 10MW Power Purchase Agreement (PPA) has now been signed between the Company and Botswana Power Corporation (BPC).
The Company, which develops power solutions in Sub-Saharan Africa through gas-fired power, solar power and hydrogen projects, said BPC will purchase up to 10MW of power generated at Tlou's Lesedi power project under the terms of the power purchase agreement.
Tlou outlined to investors that the power purchase agreement covers an initial five-year term with the 10MW project being the first phase of the Group’s planned power project expansion.
Tony Gilby, Tlou's Managing Director, said that the signing of the 10MW PPA is “a major step forward for Tlou and builds on the excellent progress made to date. It has taken some time and considerable effort to get to this point as all of those involved would appreciate.”
Addressing shareholders, he noted that this achievement puts the Company “on a firm path towards development of the Lesedi power project and considerable growth potential.”
Shares in Tlou Energy jumped 23.53% to 3.15p in late morning trading following the news.
The Lesedi project, located in Botswana’s central district, is Tlou's most advanced project. The project has all approvals in place to allow development to commence and the first phase will be a 10MW power project with electricity to be sold to Botswana Power Corporation. Once in full production, 10MW of generation could provide annual revenue of around $10m.
Tlou has agreed terms with a potential financier for an initial $10m package to develop the project. It said legal agreements in relation to this proposal are being prepared and that these agreements will need to be finalised and signed before the package becomes binding.
Tlou has outlined to investors before that Botswana is currently not meeting power demand from internal generation and the country is reliant on imported power at an enormous cost.
Tlou said it plans to start with the supply of power to Botswana ‘followed by expansion across southern Africa where demand for new sources of cleaner energy is very strong.’
‘The demand for cleaner sources of power is growing in many jurisdictions and gas prices are rising rapidly,’ Tlou told shareholders. Looking ahead, Tlou said it believes that with its established gas reserves and resources, and its ability to develop gas, solar and hydrogen projects, that it is ideally positioned to take advantage of the favourable market conditions.
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