Freshly listed Botala Energy, targeting gas in Botswana, signs MOU with Finnish solar player

Listed only in mid-July and staying relatively quiet since then, Botala Energy (ASX:BTE) has today unveiled it will use Solar Finland’s patent ‘Salo’ photovoltaic panels on-site its African operations.

Botala operates in a region of Botswana called Leupane and here it seeks to establish a light industrial area to support its coal bed methane operations, the Serowe CBM project. All things going to plan, the company will seek to use solar panels to allow for renewable energy generation on-site. 

Using renewable energy to power operations would thereby allow Botala to boast ESG credentials by moving towards a partial decarbonisation. A mix of renewable power and gas-fired power is also intended to be sold into local electricity markets. 

Given that the company is seeking to produce natural gas in Africa by fracking coal bed methane, it’s not difficult to see why management will be seeking to make glossy the project’s reputation where possible. 

Of course, at the same time, Africa simply needs more gas, and Dutch firm Rystad Energy expect a supply boom by 2030. 

Panels to be made in Botswana 

As part of the binding agreement (which means it is intended by both parties to be legally enforceable,) Botala will seek to establish a solar panel manufacturing plant at its Leupane industrial park. 

Worth noting is that the MOU still needs both parties to execute a separate ‘final business opportunity.’ 

How, exactly, Botala intends to manufacture panels in Botswana, and whether or not members of Solar Finland’s existing supply chain will go to the Botswanan factory, and where feedstock materials for those panels will come from, is so far unclear. 

A sceptical investor could be forgiven for describing the notion as ambitious. 

This scepticism may become more understandable when considering the plan will have to first win support from the government of Botswana, and then also see Botala and Solar Finland spearhead a campaign to establish Independent Power Producers (IPPs) in the country. 

Solar Finland also wants to market and distribute its panels to other neighbouring African countries. For all intents and purposes, Solar Finland is attempting to use the MOU with Botala to get a foot in the door in southern Africa. 

The MOU also locks both parties into a vague R&D agreement to probe the logistics of producing hydrogen on-site later down the line. Shareholders would be wise to make sure the ‘final business opportunity’ is executed first. 

With all of that said, if anyone is going to do it, it will probably be Finland. 

Eagerly awaiting execution 

“[We are] eagerly awaiting the execution of the joint development projects in Botswana,” Solar Finland CEO Esa Areva said. 

“It has been magnificent to explore with Botala Energy the mutual business opportunities related to solar and gas electricity.” 

Botala’s management, meanwhile, were more specualtive in tone. 

“The MOU with Solar Finland creates an exciting opportunity for Botala to investigate clean energy solutions,” company CEO Kris Martinick said. 

“This binding MOU is a significant step forward in our objective to develop our Serowe CBM project and produce clean energy, [during] ongoing exploration and appraisal of our field.” 

Pure Hydrogen holds 19.99% of Botala 

In mid-late June, Pure Hydrogen (ASX:PH2) announced it had picked up a 19.99% stake in Botala Energy ahead of its listing on the Aussie bourse. 

Pure’s shares went up 7% on the news. 

Furthermore, Pure is to act as a major interest holder in the Serowe CBM project, with that share to get higher, up to 51%. 

A 51% interest would effectively give Pure a majority rule over the project, though, that depends on whether or not it acts as an operator. 

Much of Botala’s $5m IPO was funded in part by existing Pure Hydrogen shareholders. 

Of course, between the lines, Pure Hydrogen’s involvement with an African gas player in the first place did suggest Pure was seeking to produce hydrogen in Africa. 

With Botala and Solar Finland now exploring just that, it’s possible Pure Hydrogen might just actually pull this off, but right now, that isn’t guaranteed at all.

Botala's charts since listing in mid-July show a fairly illiquid stock. Given the unfortunate time it chose to list, however, perhaps this is to be expected