Southern Africa-focused energy supplier Tlou Energy PLC (LON:TLOU) has been selected to develop a 50 megawatt (MW) coal-bed methane (CBM) power plant by the Botswana government.
Shares in the energy company were up nearly 18% on the back of the announcement.
Tlou originally submitted an application to develop a 10MW power plant at its Lesedi CBM project, and says the upgrade to 50MW shows the government’s support for domestic power sources.
“A 50MW project is five times larger than expected and a fabulous result for the company,” said acting managing director Gabaake Gabaake.
“Importantly it provides more certainty to our investment case to increase our power output as we develop our field.”
Tlou added that a larger project could strengthen the range of parties interested in partnering to finance the power plant’s development.
The upgrade comes after the government in the country proposed that the delivery of 100MW of CBM power be incorporated into its future energy supply plans.
The government in Botswana wants to find ways to address the country’s chronic power shortage and to reduce the reliance on imported energy, and invited applications on ways to generate and supply emergency power last November.
Broker WH IRELAND said today’s announcement is “materially positive”, while Panmure Gordon believes the energy firm is now “in the box seat” for domestic power generation in Botswana.
SP Angel wasn’t quite so upbeat on the news, saying that although solid progress has been made so far, there are “a number of elements that need to be completed before this can be classed as a development project.”
Shares were up 0.72p, or 18%, to 4.85p.