Members of Parliament (MPs) on Thursday reigned supreme when they rejected a supplementary budget proposal brought before parliament by Minister of Finance and Economic Development, Kenneth Matambo in order to finance the suspicious P900 million North-South Carrier II tender.
In a rare development, amid political unrest in the ruling party, a number of legislators from the Botswana Democratic Party (BDP) joined ranks with the opposition benches to reject the supplementary budget. After a spirited debate, coupled with ruling party caucuses at intervals, 26 MPs voted against the supplementary, with 24 voting in favour.
The North- South Carrier II Project which was not part of the current National Development Plan 11 was conjured recently by cabinet, with the several sources claiming that the tender was tailor made for a company that would later help fund BDP’s general elections campaign. The BDP has rejected this outright in a statement released a fortnight ago. The BDP recently made it public knowledge that the party is broke and that it will raise funds in order to finance its bid to retain state power. The party has pledged to go back to its members for finances.
The tender, which was initially valued at P700 million was later altered to P900 million before being awarded to Khato Civils. It has emerged from Finance and Estimates Committee, chaired by Member of Parliament for Francistown West, Ignatius Moswaane that the project did not have a budget, and that it was not conceptualised by the ministry as per procedure.
“The project had no urgency because it was going to be covered by the NS2 (North South Carrier 2). It is alleged that the Office of the President then became the sponsor of the project then put pressure on the Permanent Secretary to embark on the project,” the committee noted in its recommendations.
According to Report on Supplementary Estimates of Expenditure from the Consolidated and Development Funds from the Finance and Estimates Committee Financial Paper No. 1 of 2019/2020, the Minister should have motivated for the inclusion of the project into the NDP 11 first through the midterm review.
The report also indicate that with the commissioning of the Pump Station 4.1 to increase the water volumes, further pumping and injections of Masama water into NSC1 will have not been possible. What came out clearly was that, with Pump Station 4.1 in action, Masama would need a separate pipeline if it is to be pumped, the committee resolved. The report also rebuffs the involvement of the Directorate of Intelligence and Security Service (DIS) in projects’ and contractors. It indicates that the DIS issued directives to the Ministry which led to the cancellation of one of the NSC11 tenders.
“What the Ministry out to have done was to have given the contractor an opportunity to advance its justification to proceed with the works instead of cancelling the contract immediately,” said the report. The committee is of the view that the NSC 11 projects would have been at an advanced stage had it not been for the involvement of DIS. According to Moswaane’s report Water Utilities Corporation Management Tender Committee had flaunted the Procurement procedures by evaluating and awarding a tender without first securing the project funding.
“The procedure is that you first secure the budget because the process of tendering is expensive and one should not incur such costs or commit government without assurance that the project will proceed or be funded,’’ the report said. The WUC Management Tender Committee evaluated the tender in June 2018, and Khato Civils was deemed the lowest cost priced amongst the 3 bidders which had proceeded to this stage at a contract price of P781 555, 356. 90.
This price was above the initial project budget of P750 000 000 by P31, 555, 356.90 (4.2%). The Management tender Committee awarded the tender to Khato Civils pending contracting. “This process was procedural as the Presidential Directive was also clear in who should undertake the pre- tender and pre- contracting process. It has not been adequately explained why the Ministry needs P900 000 000 for the project that was awarded at an escalated value of P781 555, 356. (From an original budget project of P 750 000 000)”.
On awarding the tender to Khato Civils, the bidder was further advised of the condition of the award as relating to the fixed prices and non-escalation of costs as per the approved bid. Cabinet members were reportedly divided over the awarding of the project but they were overruled and the matter was put to bed by authorising the award of the tender to Khato Civils at P900 million.
Moswaane on Thursday told parliament that he was aware, and that he had information indicating that the tender had already been awarded. This was despite the fact that Minister of Finance and Economic Management, Kenneth Matambo claimed that the tender was yet to be awarded, according to his knowledge. The awarding of the tender is also linked with the departure of Chief Executive Officer (CEO), of WUC, Mmetla Masire weeks ago after he reportedly disapproved the purchasing of the pipes directly from China.
Masire was reportedly adamant that the pipes can be sourced readily available in Botswana and South Africa, instead of being procured in China, sources said. It is said that procurement of pipes went on even though the budget was not approved by the ministry because other stakeholders we not on board when the decision was made. Sources indicate that some funds which were allocated to refurbish Lobatse Water Reticulation Infrastructure were diverted to seal the deal between the Ministry and Khato Civils.
The tender entails refurbishing the North South Carrier 1 (NSC-1) Pump Stations PS 1.1 (Tender WUC013 of 2017) and PS 2.1(Tender WUC013 of 2017) to enhance efficiency. The main objective is to upgrade and refurbish the Pump stations in order to provide required water outputs to BPT1A1 and BPT2A1, respectively. This scope of works cover general requirements for assessment, supply, delivery and installation of Mechanical, Civil, Electrical, Control Equipment, Instrumentation Equipment, Actuators, Associated Accessories, and documentation (drawings and manuals).
Khato Civils / NTR Technology Holdings JV (KCNTRJV) having demonstrated in their tender proposals that they have the technical, financial and managerial skills to complete the Contracts successfully was appointed on an EPC basis by the Water Utilities Corporation (WUC) of Botswana on 16 February 2018 for the refurbishment of Pump Stations PS1.1 and PS2.1 located on the North- South Carrier 1 pipeline. The Contracts valued at BWP 101, 767,567. 33 and BWP 93, 451, 640. 26 are running simultaneous and must be completed within 15 months ending on 12th August 2019.
Pump station PS1.1 is situated at Letsibogo dam, while Pump Station PS2.1 is situated approximately 32.6km downstream from Letsibogo dam, at Moralane, together with Break Pressure Tank 1 (BPT1A1). Both pump stations are currently running with Constant Speed Drive Pumps. One of the activities embedded in the upgrade and refurbishment of the two pump stations is to change from Constant Speed Drive Pumps (Roto- Starter) to Variable Speed Drive (VSD) Pumps. For correct and accurate VSD pump selection, good understanding of the condition of the current NSC-1 pipeline system, working in synergy with the two pump stations is required.
This project covers all equipment in the Pump Stations, including modification of the suction and delivery pipe work and construction of a building to house Variable Speed drive units. The second requirement is for the Scheme SCADA upgrade, engineering and configuration to cater for all changes which have been effected at the pump station to allow for monitoring, control, data acquisition and automation in order to enhance operational efficiency of the scheme.
What MPs said
P900million is a tremendous quantum of resource so even in our debates we should not be scanty because no one has given us cost benefit analysis. I have no basis of approving these projects. There are litigations issues in other projects so there is a possibility there could be hidden information on this one. We have a DIS institution which I have always categorised as rogue because of the way our government is structured. We need to have oversight institutions not interference and between the two I will prefer listening to an oversight authority. I will not support the P900 million projects.
No one has ever said that the people do not need water, they do and we need to provide them with that as a resource. So as MPs our task here is to release the funds not to be tender adjudicators. If you want to be a tender adjudicator you can go and leave this house, here our job is to pass laws. Let’s release the funds then if anything the relevant authorities will assess the tendering process. Like it or not we will pass this so that our people get the water they so need.
Our people in Nata-Gweta, Kutamogoree, Molepolole and Palapye need water and we should provide that to them. But my main concern is the P900 million. To me this is very high and we should not be spending so much while there are other needs that the voters need. Some of these things we know them, we have been sub-contractors before and right now we cannot justify how we arrived at this amount because it is very simple. Personally I approve the project for Batswana across the nation to be availed water but I do not approve the amount needed for the project.
We need to draw water for Batswana. We spend between P300K and P400K on water bowsing daily in all the 18 constituencies. We want to increase quality of water supply and we are not going to be cancelling the National South Carrier 2. We have a delay on Mmamashia plant and we are trying to find a new solution on this issue because water demand is growing.
Khato Civils has been awarded the tender despite the minister dismissing that fact. I can even avail minutes of that meeting when the tender was awarded because it is said it was a presidential order. So the minister is misleading this house when he says the tender is yet to be awarded. So I stand by the committee (estimates) recommendations. The minister should also tell this house that Water Utilities is not supposed to award tenders as per the PPADB Act. But PPADB officials have told us that Water Utilities has refused to furnish them with a vetting letter since 2016. So this project with this huge amount should not be allowed to pass.
Stanbic Bank Botswana Quarterly Economic Review indicates that Botswana will fail to meet some of its Vision 2036 targets, particularly unemployment reduction and reaching high-income status.
The report says this is mainly due to the slow economic growth that the country is currently experiencing. This Quarterly Economic Review focuses on the 2020 Budget Speech.
The first paper reviews the entire budget with its key observations being that this budget is prepared as prescribed by the Public Finance Management Act; the priorities it seeks to address are drawn from Vision 2036 and the eleventh
The 2020 budget Speech, which was the maiden speech by the Minister of Finance and Economic Development, Dr. Thapelo Matsheka, and the first after the 2019 general elections, was delivered to Parliament on the 4th of February 2020.
It has been well received by the labour unions, business community, and the public at large as well as international organisations such as the International Monetary Fund (IMF).
It mainly derived its support from key facets including, emphasis on changing the business-as-usual approach to development; outlining the transformation agenda; fiscal reform that minimizes the negative impact on economic development and human welfare, competiveness and the decision to implement the 2019 negotiated and agreed public sector.
The budget’s progress review shows that economic growth was consistent with the NDP 11 projections, with growth of around 4 percent. At this growth rate, the country would neither ascend to a high-income status nor reduce unemployment towards the Vision 2036 target of a single digit.
Simple calculations of this review confirm that the economy will need to grow the Vision 2036’s target of 6 percent over the next 16 years for per capita income to increase from around USD 8,000.00 to above USD 12,000.00 in current prices.
Further, the population is anticipated to grow by only 2 percent per annum.
For this reason, the focal areas for the forthcoming FY’s budget include measures to increase economic growth towards an average of 6 percent per annum.
Economic diversification is reportedly progressing fairly well. The report says, the share of the non-mining private sector in value added has risen to 66 percent in 2018 from to 63 percent in 2015.
The sectoral pattern of growth showed that the performance of services sector (particularly transport & communications, trade, hotels & restaurants, and finance & business services) has been the silver lining and that of mining sector was subdued whilst the utility sector disappointed.
The drive towards the service sector of the economy, especially to low-productivity activities (tourism, public administration, wholesaling and retailing) does not bode well for the country’s development aspirations.
In the previous versions of this Quarterly Review, it was noted that there is need for the rethinking of economic diversification. Since the country’s domestic market is small, it is inevitable that economic diversification not only focus on broadening the product mix, but also the composition of exports and markets.
This understanding of economic diversification has not been embraced by this year’s budget. Consequently, Botswana’s exports are still overwhelmingly diamonds, which means that the rest of economic sectors are still highly dependent on foreign-exchange earnings from diamonds. Thus, “the transformation programme requires a review of the country’s entire ecosystem”.
The budget review of the economic context also depicts that an economy with positive medium-term prospects, with growth expected to recover to 4.4 percent in 2020 from the expected growth of 36 percent in 2019 largely due to faster growth of services sectors and, thereafter, to slow-down to 4 percent in 2021.
These projected growth rates are comparable to those of the IMF staff’s baseline scenario of 4.2 percent in 2020 and 4 percent in 2021. Thus, the business-as-usual scenario produces growth rates that are still too low to achieve Botswana’s development objectives and create enough jobs to absorb the new entrants into the labour market.
Trade tensions between the two major markets for diamond exports, viz., the United States of America and China, is one of the factors that are cited as contributing to, indeed, undermining not only the domestic growth, but also the fiscal position.
Another notable downside risk to both global and domestic growth is outbreak of the coronavirus in China around January 2020. This has been declared as a global health emergency. In an attempt to contain the spread of the novel coronavirus pneumonia, the Chinese authorities have ordered city lockdowns and extended holidays, of course, at the expense of near- term economic growth, according to the new Stanbic Bank Botswana report.
According to Nomura Holdings Inc., fewer migrant workers returned for work than in previous years and business activities have been slow to pick up. The havoc wreaked by the virus on the world’s second largest economy is likely to spill over to the global economy. In fact, it has resulted in a glut in crude oil and, thereby placed oil markets into a contango, i.e., a market structure where near-term prices trade at a discount to future contracts.
It also presents significant risks one of Botswana’s main drivers of economic growth, diversification and foreign exchange earnings. According to the Financial Times (February 13, 2020), Chinese tourists spent $130 billion overseas in 2018. Regardless of whether the growth materializes, the projected domestic growth rate would not transform the economy to a high-income one.
Progress towards reduction of unemployment, to a target of single digit, and poverty and achieving inclusive growth has also been relatively slow, the Stanbic Bank Botswana Review says.
Ministry of Presidential Affairs, Governance and Public Administration (MOPAGPA) has through the Office of the President (OP) proposed to avail Orapa House for use by private training institutions as well as research institutions involved in the area of technology development.
For a very long time the monumental building located in the heart of the city has been a white elephant, despite government purchasing it for nearly P80 million from De Beers in 2012.
However, government has now identified a productive use for the iconic building. “The overall vision is for the building to be transformed into a hub for digital technology research and development to be carried-out by institutions, such as; Limkokwing University, BIUST, BITRI and other relevant stakeholders.”
The decision was taken as government traverse a new path of transforming the economy from a mineral led economy to a knowledge based economy through the promotion of research and innovation. However, the facility will need major maintenance to be carried-out in order to meet the requirements of the proposed change in use.
“The work will include provision of laboratories, work stations, production areas and seminar rooms; audio visual centre, high speed internet connectivity, exhibition areas and offices,” reads the proposal note for the development.
These developments will be done through the refurbishment and maintenance of the main building, workshop, and ablution block, gate house, parking area, grounds, and access control and security service.
“There will be minimal modifications to the structure as it stands. The project is estimated to cost approximately P50, 000, 000,” says the report. In this regard, it is said, the initial scope of the OP facility will be modified to accommodate the envisaged digital technology research and development hub.
With funds needed to improve the building, OP has requested that; “the 2020/21 annual budget provision for Orapa House will need to be increased by P37,500,000 from P2,500,000 to P40,000,000 to kick start the maintenance works.” Funds will be sourced from the projects that have been delayed due to Covid-19 protocols during the 2020/21 financial year.
The building has been a thorny issue for government for years. Initially, OP was expected to move there but the move never materialised. At one point it was a question of whether the Office of the President and the Ministry of Finance and Economic Development were planning to override a decision by Parliament which rejected the proposal to buy Orapa House under the belief that government may be buying its own property. The building was to be bought at a negotiated cost of P79 million.
Again in 2012, Government had wanted to buy Orapa House for a negotiated P79m but the Finance and Estimates Committee of Parliament had rejected the request because of the inconsistencies realised in the supporting documents of the proposed procurement. The valuation of the building was put at P74 million.
The Ministry of Lands and Housing had initially offered De Beers P73, 000,000 as the purchase price. However, De Beers countered with P85, 000,000. On negotiation and converging of the minds, the selling price was finally agreed at P79, 000,000.
Auditor General, Pulane Letebele, has expressed discontentment at the worrying and deteriorating state of brigades in the country.
In an audit inspection which was carried out at Tshwaragano Brigade in Gabane, a number of observations showed weaknesses and shortcomings in the conduct of the financial affairs of the institution.
According to Letebele’s report, former students of the brigade had been engaged to carry out maintenance works on the school premises, comprising of painting, tiling, plumbing and electrical works, which covered the period from July 2017 to June 2018.
Although the agreed maintenance period had elapsed, the works had not been completed because of unavailability of funds and this situation had persisted up till the time of inspection in November 2019.
Auditor General says arrangements should have been made in time for funds to be available to complete these relatively minor works even before the works commenced.
Various contractors had been engaged for clearing the bush and for the supply of concrete stones, pit and river sand and hiring equipment for digging the trench towards the construction of an auto mechanics workshop, the report said.
It stated that the cost of services and supplies provided totalled P117 949.80. However, despite the services and the supplies having been paid for, the construction works had not commenced for a long period afterwards, resulting in the trench filling back in.
The audit inquiries had not elicited satisfactory responses as both the institution and the Ministry had not accepted the responsibility for the project, although orders for the provision for the supplies had been made. For their part, the Ministry had stated that they had sub warranted funds for the purchase of porta cabins.
Letebele indicated that it is therefore confusing that a project which is critical to the functioning of an institution such as this one would commence without a well-defined plan.
Furthermore, the accounting and maintenance of records for the supplies items were not of the standard prescribed by the Supplies Regulations and Procedures in that the supplies ledger cards, the main accounting records for Government assets, were not properly maintained for the recording of receipts and issues.
This had resulted in significant discrepancies between physical and ledger balances, while in other instances the supplies items had not been recorded at all.
The report says 24 of the 91 new computers found in the computer laboratory at Kumakwane ABC campus were not recorded anywhere, as were the other computers in the storeroom which could not be counted due to the disorderly storage conditions.
The institution had entered into a contract agreement with a security company for the provision of security services at Tshwaragano Brigade, ABC and Horticulture campuses at Kumakwane for a 2-year period which ended in June 2018, WeekendPost learnt.
After the contract expired in June 2018, an extension was granted till the 30th September 2018. Since then, there has been no security service coverage for the institution to-date. According to Auditor General, in the face of prevailing crimes, it is of paramount importance that government properties be protected by provision of security services at all times.
At Tlokweng Brigade, it was noted that the kitchen staff were working under difficult conditions as the kitchen facilities and equipment, such as the cold room, tilting pot, food warmers and solar power for hot water were dysfunctional. The kitchen roof was leaking and men’s restrooms was not working. All these need to be brought to a reasonable and functional state of repair.
The kitchen staff should use a purpose-designed Rations Ledger for the recording of receipts and issues of foodstuffs to reflect the usage of those items. As far back as 2014 the Department of Buildings and Engineering Services had found that the house occupied by the bursar was uninhabitable on account of structural defects, the report said.
A site visit during the audit had established that the house was indeed unfit for occupation as there were cracks on the walls, power switches were not working and the roof was leaking. On a sadder note, there were a number of finished items of clothing, such as dresses, shirts, and jackets from students’ practical exercises from the Fashion Design Textiles Workshop.
Auditor General shared her take on this, saying: “I have not been able to ascertain the policy on the disposal of products from these practicals. A trace of 103 green acid-proof overalls which had been purchased in August 2018 had indicated that there was no record of these items having been recorded or issued, nor were they available in stock. I was not able to obtain any explanation for this situation.”
Kgatleng brigade was also audited and inspected by Auditor General who observed that the brigade has 26 institutional houses at Bokaa, both old campus and new campus. Some of these houses are very old and dilapidated, with two declared uninhabitable. The condition of the houses is a clear indication of lack of care and maintenance of these properties.
At the time of the audit, there was no contractor engaged for the provision of security guard services at the new campus, after expiry of the previous one in July 2019. It is hoped that steps would be taken to safeguard the security of the premises and government properties against any acts of hooliganism.
In August 2019, there was a break-in at the electrical and at the plumbing maintenance workshops and a number of high value items, such as drilling machines, bolt cutters, spanners and cables, were stolen. The break-in and theft were reported to the police.
“However, at the time of writing this report I was not aware of the outcome of the police investigation, nor of any loss report submitted in terms of the Supplies Regulations and Procedures,” Letebele said.