GABORONE, April 26 (Reuters) - Botswana's government on Wednesday granted First Quantum Minerals Ltd and African Energy a tax holiday to build the 450 megawatt (MW) Sese coal power plant in a bid to encourage private sector investment in the sector.
Despite being endowed with an estimated 212 billion tonnes of coal resource, Botswana's coal-to-power industry remains largely untapped.
Australian-listed coal and energy junior, African Energy, said Botswana's government had granted the joint venture firms a five-year tax break from its first year of commercial operation and a preferential 15 percent company tax rate thereafter.
Botswana's normal corporate tax rate stands at 22 percent.
The tax break requires the approval of the Parliament.
The Sese project, which includes a coal mine as well as the 450 MW power plant in eastern Botswana, will supply power to neighbouring countries such as Zambia.
The project is managed by majority shareholder in the joint venture, Canada's First Quantum, which holds the majority stake.
Under the terms of the joint venture, First Quantum will supply about half of the power from the project to its Zambia copper mine operations with the rest supplied to other users.
First Quantum owns 80 percent of the operator of Kansanshi, Africa's largest copper mine in northwestern Zambia. (Writing by Tanisha Heiberg; Editing by James Macharia)