Australian energy company Tlou Energy has entered into a binding agreement with Independent Power Corporation (IPC) for joint development of a proposed 100MW coal bed methane (CBM) to power project in Botswana.

As part of the agreement, IPC has received letters of interest for in-principle funding support for the power and infrastructure requirements of the IPP project and will also contribute to the cost of the project.

In January, Tlou received a request for proposal to tender and develop a CBM power plant of up to 100MW at the Lesendi CBM project in Botswana.

The two companies have agreed to jointly finalise the work on a detailed proposal for submission to MMRGTES for the supply of CBM power to modular stages and also includes negotiations with third parties on the terms of off-take agreement, network access and project funding. For the 100MW project, gas will be supplied from the Lesendi CBM project.

Tlou managing director Tony Gilby said: “Tlou is strengthening its position as the leading gas to power company in Botswana with the announcement of IPC as our preferred development partner.

“IPC brings power generation experience and funding partners to the project that significantly enhances its viability. With an expanding gas reserves base, environmental approval for the upstream component of the proposed development and now a power development partner, we are in a very strong position.

According to the Australian company, one of the main reasons for it to collaborate with IPC is due to its relationship with General Electric (GE) that spans more than 20 years.

With IPC’s involvement, the project  is expected to be able to meet local UK content rules required for project funding and support from UK and European credit export agencies.