Another second hand jet ready to land on Air Botswana shores
Business
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.
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Business
Grit divests from Letlole La Rona
Grit Services Limited, a member of the pan African real estate group, London Stock Exchange listed Grit Real Estate Income Group is divesting from Letlole La Rona Limited (LLR), a local real estate company established by government investment arm Botswana Development Corporation over a decade ago.
The Board of Directors of Letlole La Rona Limited this week announced in a statement to Unitholders that Grit Services Limited (‘Grit’) has informed them of its intention to exit its investment in the company.
Grit has been a material shareholder in LLR since 2019. On 07 March 2023, Grit sold 6 421 000 linked units, representing 2.29% of the Company’s total securities in issue, at a market value of BWP 22 537 710.
This trade follows previous sales of 6.79% in December 2022, as communicated to Unitholders on 10 January 2023, as well as a further sale of 4.78% (representing 13 347 068 linked units) on 24 February 2023 to various shareholders.
In aggregate, Grit has sold 13.9% shareholding in the Letlole La Rona between December 2022 and March 2023, resulting in current shareholding of 11.25% in the Company.
Letlole La Rona said in the statement that the exit process will take place in an orderly manner so as to maintain stability of the Company’s share price.
The statement explained that Grit’s sale of its entire shareholding in LLR is in line with its decision to exit investments where it does not have majority control, or where it has significant exposure to currencies other than US dollar, Euro or hard-currency-pegged revenue streams.
“Grit has announced similar decisions pertaining to certain of its hospitality assets in Mauritius recently. The Company would like to advise Unitholders that it remains focused on long-term value delivery to all stakeholders” LLR said
In July last year as part of their Go-to-Africa strategy Letlole La Rona acquired an initial 30% equity stake in Orbit Africa Logistics, with an option to increase this investment to 50%. OAL is a special purpose vehicle incorporated in Mauritius, owning an industrial asset in a prime industrial node in Nairobi, Kenya.
The co-investment was done alongside a wholly owned subsidiary of London listed Grit. The Orbit facility is situated on a prime industrial site on Mombasa Road, the principal route south of Nairobi center, serving the main industrial node, the port of Mombasa and the industrial town of Athi River and is strategically located 11 kilometers south of the international airport and 9.6 kilometers from the Inland Container Depot.
Grit shareholding in Letlole La Rona was seen as strategic for LLR, for the company to leverage on Grit’s already existing continental presence and expand its wings beyond Botswana borders as already delivered by Kenya transaction.
Media reports have however suggested that LLR and Grit have since late last year had fundamental disagreements on how to go about the Go-to-Africa strategy amongst other things, fuelled by alleged Botswana government interference on the affairs of LLR.
Government through LLR founding shareholder – Botswana Development Corporation has a controlling stake of around 40 percent in the company. Government is the sole shareholder of Botswana Development Corporation.
Letlole La Rona recently released their financial results for the six months ended December 2022, revenue increased by 4% to P50.2 million from P48.4 million in the prior comparative six months, whilst operating profit was up 8% to P36.5 million. Profit before tax of P49.7 million was reported, an increase of 8% on the prior comparative six months.
“We are encouraged by the strong results, notwithstanding a challenging economic environment. Our performance was mainly underpinned by annual lease escalations, our quality tenant base and below average market vacancy levels, especially in our warehouse portfolio,” Kamogelo Mowaneng, Letlole La Rona Chief Executive Officer commented.
LLR reported a weighted average lease expiry period of 3.3 years and escalation rates averaging 6.8% per annum for the period ended 31 December 2022.Its investment portfolio value increased by 14% year-on-year to close the period at P1.4 billion, mainly driven by the acquisition of a 30% stake in OAL in July 2022.
The Company also recorded a significant increase in other income, predominantly due to foreign exchange gains on the OAL shareholder loan. “We continue to explore pipeline opportunities locally, and regionally in line with our Go-to-Africa strategy and our interest remains on value-accretive investments,” Mowaneng said.
An interim distribution of 9.11 thebe per linked unit was declared on the 6th of February 2023 for the half-year period to 31 December 2022, comprising of a dividend of 0.05 thebe and debenture interest of 9.06 thebe per linked unit which will be paid to linked unit holders registered in the books of the Company at the close of business on 24 February 2023.
Business
Stargems Group establishes Training Center in BW
Internationally-acclaimed diamond manufacturing company StarGems Group has established the Stargems Diamond Training Center which will be providing specialized training in diamond manufacturing and evaluation.
The Stargems Diamond Training Institute is located at the Stargems Group Botswana Unit in Gaborone.
“In accordance with the National Human Resource Development Strategy (NHRDS) which holds the principle that through education and skills development as well as the strategic alignment between national ambitions and individual capabilities, Botswana will become a prosperous, productive and innovative nation due to the quality and efficacy of its citizenry. The Training Centre will provide a range of modules in theory and in practice; from rough diamond evaluation to diamond grading and polishing for Batswana, at no cost for eight weeks. The internationally- recognized certificate offered in partnership with Harry Oppenheimer Diamond Training School presents invaluable opportunities for Batswana to access in the diamond industry locally and internationally. The initiative is an extension of our Corporate Social Investment to the community in which we operate,” said Vishal Shah, Stargems Group Managing Director, during the launch of the Stargems Diamond Training Center.
In order to participate in this rare opportunity, interested candidates are invited to submit a police clearance certificate and a BGCSE certificate only to the Stargems offices. Students who excel in these programs will have the chance to be onboarded by the Stargems Group. This serves as motivation for them to go through this training with a high level of seriousness.
“Community empowerment is one of our CSR principles. We believe that businesses can only thrive when their communities are well taken of. We are hoping that our presence will be impactful to various communities and economies. In the six countries that we are operating in, we have contributed through dedicating 10% of our revenues during COVID-19 to facilitate education, donating to hospitals and also to NGOs committed to supporting women and children living with HIV. One key issue that we are targeting in Botswana is the rate of unemployment amongst the youth. We are looking forward to working closely with the government and other relevant authorities to curb unemployment,” said Shah.
Currently, Stargems Group has employed 117 Batswana and they are looking forward to growing the numbers to 500 as the company grows. Majority of the employees will be graduates from the Stargems Diamond Training Center. This initiation has been received with open arms by the general public and stakeholders. During the launch, the Minister of Minerals and Energy, Honorable Lefoko Moagi, stated that the ministry fully endorses Stargems Diamond Training and will work closely with the Group to support and grow the initiative.
“As a ministry, we see this as an game changer that is aligned with one of the United Nations’ Six Priority Sustainable Development Goals, which is to Advance Opportunity and Impact for Diversity, Equity, and Inclusion (DEI). What Stargems Group is launching today will have a huge impact on the creation of employment in Botswana. An economy’s productivity rises as the number of educated workers increases as its skilled workmanship increases. It is not a secret that low skills perpetuate poverty and widen the inequality gap, therefore the development of skills has the potential to contribute significantly to structural transformation and economic growth by enhancing employability and helping the country become more competitive. We are grateful to see the emergence of industry players such as Stargems Group who have strived to create such opportunities that mitigate the negative effects of COVID-19 on the economy,” said the Minister of Minerals and Energy.