Sector Legal Instruments Enabling Financing And Operation Mining And Energy Infrastructure

by Golekanye G. Rabasha.

Jan 17, 2023


This section briefly discusses special provisions sector -legislation that are meant to facilitate investment in mining and mining-related operations and in energy infrastructure. We specifically discuss project finance and securitization. We discuss the mining sector and energy sector legislation. 

But what is project finance and what is securitization for our purposes?  Esty succinctly defines project finance as “…involve[ing] the creation of a legally independent project company financed with nonrecourse debt (and equity from one or more sponsors) for the purpose of financing a single purpose, industrial asset”. 

On the other hand, securitization is a financing technique whereby a company transfers rights in receivables or other financial assets to an entity that serves as a “special purpose vehicle” (SPV), which in turn issues securities to capital market investors and uses the proceeds from the issue to pay for the financial assets.


Mining is regulated, amongst others, under the Mines and Minerals Act. Botswana’s mining legal regime has been adjudged for its clarity on concession allocation, conversion and transfer. This “investor-friendly” legal regime was enacted in 1999. The grant, progression from prospecting to mining is made more secure and certain, inter alia, by the restriction of Ministerial discretion. The Minister is, for instance, required to issue a mining licence or permit if an applicant satisfies requirements, largely relating to access to expertise and financial resources. The Minister’s power to suspend and cancel authorizations is largely restricted to defaults. Prospecting licences, if transferees are qualified, only need to be notified. The transfer, assignment and encumbrance of mineral concession rights, if the intended transferees is not disqualified, must be approved by the Minister.

Hence, the financing of mining and mining-related operations through, for instance, project finance is legislatively enabled. The recently enacted securitization act, the Movable Property (Security Interests) Act, 2022, expressly states that security interests may be created over minerals in situ. In mining, project finance, and production payment loans can be used to finance petroleum exploration and production.


The old 1973 Electricity Act was made and contemplated the involvement of only the state-owned power utility, Botswana Power Corporation, in all sectors of electricity. But in 2007 the Act was amended to enable the involvement of other players inclusive of independent power producers (IPPs). IPPs are modelled on their precursors, the American standalone companies that owned power generating plants that were financed with non-recourse debt. These are largely privately owned and sell their output to bulk suppliers. The amended Act empowers the granting of licenses for the generation, supply, transmission, distribution, export, import and other licenses. Section 4B provides for operators to transfer licenses. Section 4C restricts the power to suspend or cancel a license on grounds of non-compliance, contravention of the Act and public interest. It also provides for consultation of the licensee before suspension or cancellation.

The Act importantly provides for the access to or use of electricity transmission facilities of the Botswana Power Corporation on terms and conditions set forth in their licence. The Act further allows referral of disputes, for instance arising out of Ministerial decision to other dispute resolution and compensation arrangements which may be and have been agreed upon between the Government and a licensee. These may include referral to international arbitration.

Project finance is extensively used to finance electricity infrastructure. As in history, “…. the advent modern project finance began……in the early 1980s as the United States scrambled to build new power plants”; the move towards clean energy is likely to impel the heightened use of project finance to finance renewable energy plants and associated infrastructure.

Securitization now robustly legislatively provided for, may be used. For instance, finance may be procured by securitizing one’s entitlement to be paid (receivables) under a power purchase agreement. 

If you would like to be assisted on mining, electricity, project finance, securitization issues and related issues, contact us at our addresses and contact numbers.

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