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BERA denies Botswana Oil exclusive import license

The energy sector regulator, Botswana Energy Regulatory Authority (BERA) has rejected an application by the state owned Oil Company – Botswana Oil Limited through which it sought to be awarded an exclusive license that will see it importing 50 percent of the national petroleum requirements.

The recently enacted BERA Act allows for an entity to be issued with an exclusive license as long as the Authority is satisfied with the application. In order to process BOL’s application for such a license, BERA conducted public hearings to allow the public to express their view.

Botswana Oil Limited Chief Executive Officer (CEO) Willie Mokgatlhe had explained that his organization is fully capable to handle the exclusive import license which they had applied for, but BERA has since made a determination that the license application will not be acceded to for now based on technical, skills and financial constraints.

Despite efforts by Botswana Oil to sell their case to industry players, the public and stakeholders in the energy sector, BERA decided against them and rejected the application on the grounds that BOL failed to make out a case to demonstrate the necessity of the exclusive license. During the public proceedings, the CEO had highlighted that unlike other strongly contending companies in the sector they have the capacity to oversee the whole importing of petroleum in the sector.

The Botswana Oil Limited CEO further explained that the application for the exclusive import license which is in line with the section 38 of the 2016 Botswana Regulatory Act allows for the parastatal to hold such a license, to which the authority crashed the claim with another section in which there should be a submission of certain documents to aid the approval for such.  The decision of the Authority is further noted to be based on the failure of BOL to meet the requirements as stated in Section 32 (9) (d).

According to BERA the section requires the applicant to present their financial and technical capability, a requirement that Mokgatlhe’s organisation could not satisfy. This contributed immensely to the final decision made by BERA. The Authority was not in a position to do an assessment because the requisite evidence was not availed and there was no explanation to what changes would effect in the importing of petroleum products should the license be granted to BOL.

They cited that such an important decision could not be taken on the basis of speculation because they were not afforded documented plans on the costs and benefits of the proposal. Although Botswana Oil Limited CEO made a case of job creation and sustainability as benefits to the public when presenting to during the public hearing, BERA failed to establish the said benefits of the import license because there was no documentation to support the assertions of the Botswana Oil Limited’s CEO.

On Technical Capability, it was established that Botswana Oil Limited does not have the capacity to handle the licensing. This is one of the core requirements when applying for the exclusive license. The requirement is such that Botswana Oil Limited should have stakeholders in place to work with but at the time of the hearing Botswana Oil Limited indicated that they have no one place yet but there are efforts to engage them.

In preparation for the changes in its role, Botswana Oil Limited was said to be looking at a partnership with a Middle East company – Oman Trading International for the procurement of petroleum and petroleum products. During the hearing, Mokgatlhe explained that the Government of Botswana currently owns two depots which can hold up to 62 million litres (l) of petroleum in Gaborone and Francistown. Currently Botswana Oil Limited imports 10 percent of petroleum product of the market and also have access to government storage facilities of close to 60 million litres for commercial sales which also serves to sweeten the strategic stock.

Furthermore the decision to reject the exclusive import license was based on the realization that although Botswana Oil Limited has access to storage facilities they do not have sufficient storage to store the goods for 60 days uninterrupted.  This was supported by a finding by the Authority that the Government planned bulk petroleum products storage programme indicates that the expansion of the Francistown Depot and the Tshele Hills construction project and development of the new storage depot will only fulfill the 60 day stock capacity by 2022.

Despite Botswana Oil Limited having the support of a number of organizations, BERA explained that while Botswana Oil Limited had applied for 50 percent of the exclusive importing licensing, they had agreed and were aware that the awarding of the license would entitle them to 100 percent share of the import market. Mokgatlhe had stated that when BOL procures, they will deliver product for multinationals directly at their current 18.8 litres depots as they would not be importing for themselves.

During the hearing the Botswana Oil Limited CEO admitted that it is risky for one entity to be given 100 percent mandate for fuel supply. Mokgatlhe had said their fuel importation implementation of the product should be done overtime and they wanted to import 50 percent of the fuel volumes while the other 50 percent should be left to citizens companies. 

He said they want Batswana to also participate in the value chain and the idea is not for BOL to play in the retail or commercial space. Botswana Oil Limited has been given a 30 day period to appeal the decision at the High Court. Mokgatlhe is adamant the move is a strategic one meant to ensure consistent fuel supply in the country.

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Grit divests from Letlole La Rona

22nd March 2023

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.

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Stargems Group establishes Training Center in BW

20th March 2023

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.

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Food import bill slightly declines

20th March 2023

The latest figures released by Statistics Botswana this week shows that food import bill for Botswana slightly declined from around P1.1 billion in November 2022 to around P981 million in December during the same year.

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