Water Utilities Corporations (WUC) recent financial statement exposed the corporation’s now moribund state and waiting for the much anticipated resurrection BCL mine in connection to one of the water utility’s wasteful assets.
The Selibe Phikwe water pipes and distribution system connected to BCL, have been written off according to WUC’s latest financial results, this is due to the closure of the mine. The closure of the mine has proved to have disconnected BCL with a lot of lives, local economy, businesses, creditors and utility services. Its far reaching repercussions can be seen as the now under liquidation BCL continues to haunt its creditors.
According to the WUC books, as of 31st March 2019, assets with a sum of P85 421 were written off by the water utility. While noting in its books that the corporation does not have any property, plant and equipment pledged as security for borrowings, there were assets which have been written due to BCL closure.
“The assets write off relate to Selibe Phikwe water pipes and distribution system which went to the BCL mine. The assets were written off because the BCL mine has been closed and going through on going liquidation,” says WUC financial statements of the year ended 31 March 2019 and were released recently. In its current financials WUC has assets worth P9 million while in the last financial year it had P8 million, meaning an increase of P1 million.
The WUC assets which are still lying underground at Selibe Phikwe connecting the BCL mine even though they are not producing any income to the utility hence its value being written off. Like most people, politicians and businesses, the water pipes or WUC will remain hibernated at Selibe Phikwe until BCL opens. In April this year, the Botswana Geoscience Institute found out that a total of 50 000 earth tremor and the then BCL liquidator pointed to WUC written off pipes which are used occasionally by the utility. However WUC that time disowned the tremors.
WUC profits shrunk from being P500 million to P190 million in this current financial year. This may also be due to the fact that government has not facilitated any grant to WUC this financial year while last year the state funded the water corporation with P360 000. Government revenue grant relates to funds received from the state towards supplementing expenditure by the corporation on non-capital projects or not for acquisition of income generating assets.
WUC says during the 2019 reporting period funding was dedicated towards settlement of restructuring costs in the form of terminal benefits, staff relocation and other activities to enable the effective execution of restructuring plans. According to the utility, none of the expenditure has been incurred so far, as such the revenue grant is deferred as current liability towards expenditure to be incurred next year.
Government is currently sitting on 4 400 vacant posts that remain unfilled in the civil service. This is notwithstanding the high unemployment rate in Botswana which has been exacerbated by the recent outbreak of the deadly COVID-19 pandemic.
Just before the burst of COVID-19, official data released by Statistics Botswana in January 2020, indicate that unemployment in Botswana has increased from 17.6 percent three years ago to 20.7 percent. “Unemployment rate went up by 3.1 percentage between the two periods, from 17.6 to 20.7 percent,” statistics point out.
Leading commercial bank, First National Bank Botswana (FNBB), expects the central bank to sharpen its monetary policy knife and cut the Bank Rate twice in the last quarter of 2020.
The bank expects a 25 basis point (bps) in the beginning of the last quarter, which is next month, and another shed by the same bps in December, making a total of 50 bps cut in the last quarter. According to the bank’s researchers, the central bank is now holding on to 4.25 percent for the time being pending for more informed data on the economic climate.
An audit of the accounts and records for the supply of food rations to the institutions in the Northern Region for the financial year-ended 31 March 2019 was carried out. According to Auditor General’s report and observations, there are weaknesses and shortcomings that were somehow addressed to the Accounting Officer for comments.
Auditor General, Pulane Letebele indicated on the report that, across all depots in the region that there had been instances where food items were short for periods ranging from 1 to 7 months in the institutions for a variety of reasons, including absence of regular contracts and supplier failures. The success of this programme is dependent on regular and reliable availability of the supplies to achieve its objective, the report said.
There would be instances where food items were returned from the feeding centers to the depots for reasons of spoilage or any other cause. In these cases, instances had been noted where these returns were not supported by any documentation, which could lead to these items being lost without trace.
The report further stressed that large quantities of various food items valued at over P772 thousand from different depots were damaged by rodents, and written off.Included in the write off were 13 538 (340ml) cartons of milk valued at P75 745. In this connection, the Auditor General says it is important that the warehouses be maintained to a standard where they would not be infested by rodents and other pests.
Still in the Northern region, the report noted that there is an outstanding matter relating to the supply of stewed steak (283×3.1kg cans) to the Maun depot which was allegedly defective. The steak had been supplied by Botswana Meat Commission to the depot in November 2016.
In March 2017 part of the consignment was reported to the supplier as defective, and was to be replaced. Even as there was no agreement reached between the parties regarding replacement, in 51 October 2018 the items in question were disposed of by destruction. This disposal represented a loss as the whole consignment had been paid for, according to the report.
“In my view, the loss resulted directly from failure by the depot managers to deal with the matter immediately upon receipt of the consignment and detection of the defects. Audit inspections during visits to Selibe Phikwe, Maun, Shakawe, Ghanzi and Francistown depots had raised a number of observations on points of detail related to the maintenance of records, reconciliations of stocks and related matters, which I drew to the attention of the Accounting Officer for comments,” Letebele said in her report.
In the Southern region, a scrutiny of the records for the control of stocks of food items in the Southern Region had indicated intermittent shortages of the various items, principally Tsabana, Malutu, Sunflower Oil and Milk which was mainly due to absence of subsisting contracts for the supply of these items.
“The contract for the supply of Tsabana to all depots expired in September 2018 and was not replaced by a substantive contract. The supplier contracts for these stocks should be so managed that the expiry of one contract is immediately followed by the commencement of the next.”
Suppliers who had been contracted to supply foodstuffs had failed to do so and no timely action had been taken to redress the situation to ensure continuity of supply of the food items, the report noted.
In one case, the report highlighted that the supplier was to manufacture and supply 1 136 metric tonnes of Malutu for a 4-months period from March 2019 to June 2019, but had been unable to honour the obligation. The situation was relieved by inter-depot transfers, at additional cost in transportation and subsistence expenses.
In another case, the contract was for the supply of Sunflower Oil to Mabutsane, where the supplier had also failed to deliver. Examination of the Molepolole depot Food Issues Register had indicated a number of instances where food items consigned to the various feeding centres had been returned for a variety of reasons, including food item available; no storage space; and in other cases the whole consignments were returned, and reasons not stated.
This is an indication of lack of proper management and monitoring of the affairs of the depot, which could result in losses from frequent movements of the food items concerned.The maintenance of accounting records in the region, typically in Letlhakeng, Tsabong, and Mabutsane was less than satisfactory, according to Auditor General’s report.
In these depots a number of instances had been noted where receipts and issues had not been recorded over long periods, resulting in incorrect balances reflected in the accounting records. This is a serious weakness which could lead to or result in losses without trace or detection, and is a contravention of Supplies Regulations and Procedures, Letebele said.
Similarly, consignments of a total of 892 bags of Malutu and 3 bags of beans from Tsabong depot to different feeding centres had not been received in those centres, and are considered lost. These are also not reflected in the Statement of Losses in the Annual Statements of Accounts for the same periods.