An 8.6 months year old Embraer ERJ 170 jet with serial number 17000319 currently bearing registration code N735A lies in store and unused at UK aviation company waiting for Air Botswana to take it home, BusinessPost has established. Fresh information is that this airmachine which is currently owned by UK leading professional aircraft registration company, Southern Aircraft Consultancy, is expected to descend upon Botswana in June this year.
Recently Minister of Transport and Communications Dorcas Makgato also confirmed that government has approached the funding facility of Public Service Debt Fund (PSDF) for acquiring of two jets and the first one has arrived in last day of 2018. The PSDF loan, according to the minister, is P230 million payable over a period of seven years at an interest of 5 percent for the two jets. Before the minister released a hint, there have been sketchy details on the two aircrafts; how they were paid for and whether one or two were acquired.
BusinessPost has established the kind of the second jet which is coming to Air Botswana shores in a space of two months. The aircraft which was manufactured in 2010,m the Brazilian plane maker Embraer is currently stored at the Southern Aircraft Consultancy like her fellow sister Embraer ERJ170 (c/n 17000318), A2-ABM, formerly registered N734A which was delivered on the New Year’s Eve of 2018. The two aircrafts were both kept on the storeroom before the other was delivered to Botswana.
This publication understands that before being delivered to UK the coming Embraer jet was formerly part of the three jets (including the one that is already in Botswana) owned by Saudi Arabia’s state owned oil company Saudi Aramco. Unconfirmed reports are that both jets were part of the aircraft sales bribery matter that rocked the Asian country. They are alleged to have been part of the three jets bought from Brazilian aircraft maker Embraer SA by Saudi Aramaco linked to a huge scandal where a former executive of Embraer pleaded guilty in October 2016 to USA charges that he arranged a bribe to an employee of the Saudi company.
In early 2010 Saudi Aramco had awarded Embraer a $93 million contract for three new aircraft. Saudi Aramco named the aircraft that is now owned by Air Botswana Damman, the other one which was bought by this country and coming was named Shaybah while the third jet which was bought by the Saudi company named al-Hasa’s whereabouts are unclear.
It is reported that after the bribery scandal Saudi Aramaco’s relationship with Embraer suffered as all the three jets were never seen on the Saudi skies again before taken by Southern Aircraft Consultancy in 2018. Some reports allege that al-Hasa might still be “stored” at Saudi Arabia waiting for it to be sold. Investigations shows that ever since the 2016 scandal Saudi Aramco ‘grounded” all the Embraer aircrafts and since then the Saudi company has not flew any aircraft made by the Brazilian jet maker.
In 2016 after the bribery allegations Saudi Aramco confirmed publicly that it had “suspended all business dealings with Embraer since the incident and excluded it from any future business.” This is despite Embraer in October 2016, the same year, agreeing to pay $205.5 million to settle a six year corruption investigation by US and Brazilian authorities-a spirited attempt to resuscitate its disgraced mammoth image. During that time Embraer was involved in similar corruption scandals in Mozambique, India and Dominican Republic.
How Air Botswana settled for “cheaper” second hand jets
Further allegations reveal that the two jets which are now on Air Botswana’s books never touched the sky for a long time and were “stored” at Southern Aircraft Consultancy before being acquired at “a cheaper price” by Air Botswana. Further unconfirmed reports suggest that the N735A which is expected to come to Botswana is currently still residing at Toronto Lester B. Pearson International Airport pending its fate.
This publication can authoritatively reveal that in 2016, the same year when Embraer was hit by myriad corruption scandals involving the sale of their jets Botswana government had toyed with the idea of buying an airmachine from it. The same year a P2.6 billion refleeting tender was put forth for purchase of two jets (from Embraer) and two turbo-propellers. It was the same time when the then Minister of Tourism Tshekedi Khama was said to be taking Air Botswana from the transport ministry to his portfolio- a move that failed and so was the lucrative tender.
Three companies Embraer of Brazil, Bombadier of Canada and ATR of France were on government’s mind during that seemingly lucrative refleeting tender. A source revealed this week to the publication that the refleeting was dealt a huge blow and delayed because of disagreement of a task team that lead the project. In 2016 it also emerged that a sub-committee for privatization of Air Botswana visited countries like the US, Brazil and Canada in a bid to buy new fleet. The then minister of transport Kitso Mokaila “was not in any way going to break a bank for government to buy the new fleet” hence the disagreements, said a source.
It is reported further that government officials which were part of the negotiating team for refleeting agreed that “cheaper”, “affordable”, “sustainable” and “durable” second hand aircrafts were ideal for the hence the move to buy the two used jets. “Therefore, Botswana Government decided to buy two second hand jets for P230 million. Government officials were advised that it is affordable and sustainable. If you watch very carefully, government was advised by a consultant to buy these kind of brands which are trusted internationally and it was believed even the second hand Embraer jets or ATR turbo-propellers,” said a source.
Okavango joined by younger sister as privatization remains on the horizon
Born in 22 November and renamed Okavango by Air Botswana, Embraer ERJ170 (c/n 17000318), A2-ABM, formerly registered N734Awas acquired from Regional One last year December, but it is yet to take on the skies. It is expected to take on Lusaka and Harare routes which will be opened on next week Tuesday.
With the additional N734 which was made on 15 December 2010 coming in June, Okavango will not be a lonely jet on the Botswana skies. The coming new jet yet to be named by Air Botswana upon arrival is expected to get a brand name after being ‘born again’ to the local airliner and it is expected to traverse the long routes of Gaborone-Durban and Gaborone-Maputo in few months to come. The new jet will add to Air Botswana’s fleet of five aircrafts.
The same month when the new jet arrives, International Air Transport Association (IATA) will conduct a biennial Operational Safety Audit. The last audit which was carried in 2017 cleared Air Botswana as fit and safe. Meanwhile the national airline has been taken up by PEEPA for privatization, the process started last year December. Minister Makgato revealed recently before parliament that PEEPA has appointed Deloitte Consulting as a “Transaction Advisor”
“The key deliverable would be strategic options available to Government on how the airline could be privatized thereby enabling the shareholder to make strategic choices in line with other national strategic objectives,” said Makgato to parliament.
Botswana’s economy showed slight growth signs in the first quarter of 2021, following a devastating year in 2020.
During 2020, the entire second quarter was on zero economic activity as the country went on total lockdown in an effort to curb the spread of the virus.
Diamond trade plummeted to record low levels as global travel restrictions halted movement of both goods and people and muted trade.
The end result was a significant decline for the local economy, at an estimated 7 percent contraction, just marginally below the 2008/09 global financial crises.
According to figures released by Statics Botswana this week, the country’s nominal Gross Domestic Product for the first quarter of 2021 was P47.739 billion compared to a revised P45.630 billion registered during the previous quarter.
This represents a quarterly increase of 4.6 percent in nominal terms between the two periods.
During the quarter, Public Administration and Defence became the major contributor to GDP by 18.4 percent, followed by Wholesale & Retail by 11.4 percent. The contribution of other sectors was below 6.0 percent, with Water and Electricity Supply being the lowest at 1.6 percent.
Real GDP for the first quarter of 2021 increased by 0.7 percent compared to a contraction of 4.6 percent registered in the previous quarter.
The improvement in the first quarter 2021 GDP reflected continued efforts to reopen businesses and resume activities that were postponed or restricted due to the COVID-19 pandemic.
The real GDP increased by 0.7 percent during the period under review, compared to an increase of 1.2 percent in the same quarter of 2020.
The recovery in the domestic economy was observed across majority of industries except Accommodation & Food Services, Mining & Quarrying, Manufacturing, Construction, Other Services and Agriculture, Forestry & Fishing.
The overall slow performance of the economy was mainly due to the impact of measures that were put in place to combat the spread of the COVID-19 pandemic.
The Non-mining GDP increased by 4.1 percent in the first quarter of 2021 compared to 4.0 percent increase registered in the same quarter of the previous year.
Agriculture, Forestry and Fishing industry decreased by 2.0 percent in real value added during the first quarter of 2021, relative to a contraction of 5.2 percent registered during the same quarter of 2020.
The main driver of the unfavorable performance stems from a decrease in real value added of Livestock farming by 3.0 percent.
Mining and Quarrying registered a decrease 11.4 percent in the real value added, this was mainly influenced by the drop in the Gold and Diamond real value added by 17.5 and 12.5 percent respectively.
Diamond production in carats went down by 12.1 percent while the tonnage of Gold produced went down by 17.5 percent.
The poor performance of the diamond sub-industry is attributed to the reduction in production due to a lower grade feed to the plant at Orapa in response to heavy rainfall and operational issues, including continued power supply disruptions.
With regard to Gold is due to diminishing resource base which affect production.
The Manufacturing industry recorded a decline of 7.4 percent in real value added during the first quarter of 2021, compared to a decrease of 2.3 percent registered in the corresponding quarter of 2020.
The deep low performance in the industry is observed in the two major sub-industries of Beverages & tobacco and Diamond cutting, polishing and setting by 57.0 and 38.5 percent respectively.
The reduction in Beverages is attributed to alcohol sale ban imposed during the quarter under review in order to reduce the spread of the COVID-19 virus. On the other hand, exports of polished diamonds went down by 24.9 percent compared to a decrease of 11.5 percent registered in the same quarter of the previous year.
The construction industry recorded a decline of 4.8 percent compared to an increase of 4.3 percent realized in the corresponding quarter in 2020.
This industry comprises of buildings construction, civil engineering and specialized construction activities. The industry is still showing signs of the consequences of COVID-19 pandemic. The industry recorded a negative growth of 7.4 percent in the previous quarter.
Water and Electricity Water and Electricity value added at constant 2016 prices for the first quarter of 2021 was P506.2 million compared to P378.2 million registered in the same quarter of 2020, recording a growth of 33.8 percent.
In the first quarter of 2021, Electricity recorded a significant growth of 62.4 percent compared to a decrease of 67.6 percent recorded in the corresponding quarter of 2020.
The local electricity production increased by 22.4 percent while Electricity imports decreased by 33.3 percent during quarter under review. The water industry recorded a value added of P231.3 million compared to P209.0 million registered in the same quarter of the previous year, registering an increase of 10.7 percent.
Wholesale and Retail Trade real value added increased by 11.4 percent in the first quarter of 2021 compared to an increase of 5.5 percent registered in the same quarter of the previous year. The industry deals with sales of fast moving consumer goods.
Diamond Traders recorded a significant growth of 112.7 percent as opposed to a decline of 22.7 percent recorded in the corresponding quarter last year. The positive growth is due to improved demand of diamonds from the global market.
The Transport and Storage value added increased by 0.6 percent in the first quarter of 2021, compared to a 2.4 percent increase recorded in the same quarter of the previous year.
The slight improved performance of the industry was mainly attributed to the increase in real value added of Road Transport and Post & Courier Services by 4.3 and 2.1 percent respectively.
The slow growth was influenced by a significant reduction in Air Transport services of 69.7 percent due to reduced number of passengers carried. Rail goods traffic in tonnes went down by 6.4 percent and passenger rail transport was not operating during the quarter under review.
Accommodation and Food Services Accommodation and Food Services real value added declined by 31.7 percent in the first quarter of 2021 compared to a decrease of 4.4 percent registered in the same quarter of the previous year. The reduction is largely attributed to a decrease of 42.1 percent in real value added of the Accommodation activities subindustry.
The suspension of air travel occasioned by Covid-19 containment measures impacted on the number of tourists entering the borders of the country and hence affecting the output of Hotels and Restaurants industry. COVID-19 restriction measures resulted in reduced demand for leisure and conferencing activities, as conferences are largely held through virtual platforms.
Finance, Insurance and Pension Funding industry registered a positive growth of 8.3 percent due to the favorable performance from monetary intermediation and Central Banking Services by 16.4 and 5.4 percent respectively during quarter under review.
It is still tough in the tourism industry — big players in this sleeping giant are not having it easy, but options are being explored to keep the once vibrant multibillion Pula sector alive until the world gets back to normalcy.
One of the primary measures against the spread of Covid-19 is to stay home; this widely pronounced precaution against the global contagion that has claimed over 4 million lives across the world is however a thorn in the flesh of one of the major industries in the global economy — the tourism sector .
This sector is underpinned by travel – an act which is the virus‘ number one mode of spread, especially across borders.
Chobe Holdings Limited, one of Botswana’s leading high end eco-tourism giants said its survival strategies are underpinned by well-crafted stakeholder engagements in the mist of these unprecedented times of muted trading activity.
“Throughout the COVID-19 pandemic, Chobe continued to invest in and strengthen its relationships with key stakeholders in both its traditional markets and the SADC region,” the company directors updated shareholders this week.
To keep the business afloat, the company which owns and operates some of the exquisite tourism destinations along the banks of the mighty Chobe said it has triggered its existing available debt financing avenues.
Chobe revealed that its current overdraft of BWP 25 million has been extended on favourable terms.
The company shared that it has negotiated a further USD 1.5 million (over P16 million) standby loan with a flexible settlement terms and preferable cost implications to the bottom line.
“We are confident that the Group has sufficient cash inflows, cash reserves and un-utilized prearranged borrowing in place to settle any liabilities falling due and support the smooth recovery of operations in the short and medium term,” the company directors said, noting that they will retain the flexibility to vary operations should market conditions change.
Early this year, Chobe announced that the ongoing crisis in the tourism industry forced the company to draw from its prearranged overdraft facility of P25 million to the extent of P11.6 million.
Last year Chobe’s occupancy levels around its lodges and hotels went down 89 percent. This resulted in unprecedented revenue decline of 93% to P27.78 million from the P373.94 million in the previous year ended February 2020.
Operating profits went down 159% with profit after tax down 170%, mirroring a loss of over P67 million.
Chobe management said during the last half of the financial year they have done all they could to contain costs across the company’s operations.
During the last half of the year Chobe’s marketing and reservations teams continued to pursue the “don’t cancel but defer policy”.
“We thus continue to hold advance travel receipts, to the value of about P34 million at the financial year end,” the company revealed early this year.
Chobe said it continues to engage Government, through HATAB and BTO to prioritize the vaccination of workers in the tourism sector.
“Throughout the pandemic we have ensured that employees are trained in and comply with COVID-19 infection mitigation protocols as well as ensuring that all visitors to our remote camps and lodges as well as our staff and contractors are tested for COVID-19 before reaching the camp or lodges,” the company said.
However, the company said vaccinating the tourism staff will provide the best way to ensure that both employees and guests are protected from the virus.
“We continue to manage our cashflow through stringent cost control measures, balanced against the protection of the Group’s physical assets and the wellbeing and retention of its people,” the company said.
Chobe has successfully retained its top management through the pandemic. To this end the company directors continue to closely monitor the Group’s recovery from COVID-19 and adjust salary reductions to support operations and aid retention.
Domestic and regional travel resumed during the second quarter of the 2020/21 financial year with the Group opening a strategic mix of camps and lodges.
A comprehensive domestic, regional and international marketing plan was put in place to support these openings.
International travel resumed in the first quarter of the 2021/22 financial year with occupancies forecast to steadily increase, albeit from a low base, through the second quarter.
The company is optimistic that forward bookings are strong for the 2022/23 financial year.
“There is pent-up demand from our traditional source markets to travel now, but this is tempered by uncertainty and access constraints,” the company stated.
“Both the domestic and international markets are sensitive to such uncertainty, and it is critical that both the private and public sector work together to develop and publish clear, authoritative and consistent travel information in order to build confidence”
Chobe entered the pandemic with the Shinde camp rebuild in progress — one of its high end camps and this was completed in the first half of the 2020/21 financial year accounting for the majority of the Group’s capital expenditure for that period.
De Beers Group, the world’s leading rough diamonds producer by value and Botswana’s partner in the diamond business, ramped up its production in the second quarter of 2021, in response to stronger demand for rough diamonds in the global markets.
The London headquartered diamond mining giant revealed in its production report this week that rough diamonds output increased by 134% to 8.2 million carats in the three(3) months of quarter 2 2021, “reflecting planned higher production to meet stronger demand for rough diamonds”.
This was against the backdrop of curtailed demand in the same quarter last year, mirroring the impact of Covid-19 lockdowns across southern Africa during that period.
In Botswana, where De Beers sources majority of its rough diamonds through partly government owned Debswana, production increased by 214% to 5.7 million carats. The percentage jump mirrored planned low production in the second quarter of 2020 where output was adjusted to market demands and implemented Covid-19 protocols.
Debswana operates four (4) Mines: Jwaneng Mine- being its flagship producer and largest revenue contributor. Jwaneng Mine which is the wealthiest diamond mine in the world by value is envisaged for multi-billion expansion to an underground operation in future to stretch its existence by few more decades.
The underground project which is anticipated to cost a whooping P65 billion will be the world‘s largest underground diamond mine.
The company which accounts for over 65 % of De Beers’s global production also operates Orapa Mine- one of the world’s largest by area, Letlhakane Mine currently a tailings treatment operation and Damtshaa Mine which is under care and maintenance following market shrink in 2020.
Namibia production decreased by 6% to 0.3 million carats, primarily due to planned maintenance of the Mafuta vessel which was completed in the quarter and another vessel remaining demobilized. In Namibia De Beers sources diamonds both in land and marine through Namdeb and Debmarine respectfully.
In South Africa-the spiritual home ground of De Beers Group, production increased by 130% to 1.3 million carats, due to planned treatment of higher grade ore from the final cut of the Venetia open pit, as well as the impact of the Covid-19 lockdown in Q2 2020.
Production in Canada increased by 14% to 0.9 million carats, primarily reflecting the impact of the Covid-19 measures implemented in Q2 2020.
De Beers said consumer demand for polished diamonds continued to recover, leading to strong demand for rough diamonds from midstream cutting and polishing centers, despite the impact on capacity from the severe Covid-19 wave in India during April and May.
Rough diamond sales totaled 7.3 million carats (6.5 million carats on a consolidated basis), from two Sights, reflecting the impact of the reduced Indian midstream capacity on Sight 4, compared with 0.3 million carats (0.2 million carats on a consolidated basis) from two Sights in Q2 2020, and 13.5 million carats (12.7 million carats on a consolidated basis) from three Sights in Q1 2021.
The H1 2021 consolidated average realized price increased by 13% to $135/ct (H1 2020: $119/ct), driven by an increased proportion of higher value rough diamonds sold.
While the average price index remained broadly flat, the closing index increased by 14% compared to the start of 2021, reflecting tightness in inventories across the diamond value chain as well as positive consumer demand for polished diamonds.
Full Year Guidance Production guidance is tightened to 32–33 million carats (previously 32-34 million carats (100% bases)), subject to trading conditions and the extent of any further Covid-19 related disruptions.
When commenting to 2021 quarter 2 production figures, Mark Cutifani, Chief Executive of Anglo American- De Beers parent, said the entire Anglo American Group delivered a solid operational performance supported by comprehensive Covid-19 measures to help safeguard the lives and livelihoods of its workforce and host communities.
“We have generally maintained operating levels at approximately 95% of normal capacity and, as a consequence, production increased by 20% compared to Q2 of last year, with planned higher rough diamond production at De Beers” he said.