TLOU Energy Ltd (LON:TLOU) shares rocketed on Friday as it landed an interim power purchase agreement (PPA) for its coal bed methane fuelled gas-to-power project in Botswana.
The company said that the interim PPA had been agreed with the Botswana Power Corporation (BPC) and is now undergoing final regulatory formalities.
It added that the commercial terms remain confidential, at BPC’s request.
In a statement, TLOU described the move as a “major step forward” as it will facilitate connection to the power grid and the company’s first revenues.
TLOU noted that it remains in talks with potential project finance partners, who had been waiting to see whether the PPA would be secured.
“A pathway to revenue generation is key for financiers and once connected to the grid, expansion of the project (and thereby increasing revenue) is seen as a relatively straightforward and largely de-risked process,” it added.
The interim PPA is for 2 megawatts. TLOU said the interim PPA is separate to its proposal for a 10MW gas-to-power plant, submitted to Botswana's Ministry of Mineral Resources Green Technology and Energy Security (MMGE).
The BPC and MMGE continue to assess the 10MW proposal and will advise the Company in due course, the group added.