Power utility, Botswana Power Corporation (BPC) last Friday announced a watershed project that will completely reshape the local electricity and power supply situation.
The North West Transmission Grid (NWTG) is among government’s biggest infrastructure projects, valued at P4.6 billion and aims to extend the transmission grid to the North West, Chobe and Gantsi Districts. When deliberating on the project at the contract signing ceremony at the Gaborone International Convention Centre(GICC) last Friday, Botswana Power Corporation Chief Executive Officer Dr Stefan Schwarzfischers said the NWTG was an investment totaling to P4.6 Billion by the Government of Botswana implemented by his corporation.
Schwarzfischer said the project was one of the biggest infrastructure developments by Government amongst others like the Mohembo and Kazungula bridges. The Transmission Grid will be implemented in two phases and it is expected to create over 2000 jobs during the construction stage with about 81% of the engaged labour being local citizens, and around 8000 permanent jobs in various sectors of the economy once the project has been completed. “We also anticipate existing business from logistics, hospitality and SMEs grown and some to be birthed in the North Western region of this country,” he said.
The CEO explained that the transmission line will provide grid access to all factors of the economy being mining, tourism, commercial farming and further improve the quality of electricity supply in the country and most importantly in the north western district. “This will position the region which is a transport hub, gateway to the coast as well as rich in tourism, farming and, as lucrative investment hub for different economic value chains,” said Schwarzfischer.
He added that the project will give BPC an opportunity to reduce dependence on power import from Namibia, Zimbabwe, and Zambia as they will have the infrastructure to meet local power demand and also play an economic role of exporting power from Botswana to the SADC region through the Southern Africa power pool market.
“This signing of contracts for the construction and commission of phase 1 of the project between BPC and 3 international contractors phase is valued at 1.3 billion pula and the phase 2 is allocated another 1.2 billion,” explained Schwarzfischer. He noted that the three contractors were all international companies because locally Botswana was limited in terms of suppliers with skills and expertise in high voltage material and infrastructure development.
”The companies has been solely evaluated according to BPC and PPADB procurement standards and we are satisfied that they will deliver on the expectation of the project given the wealth of skills, technical competencies and tangible evidence of their previous work,” he said .
According to the BPC Phase 1 of the project has been divided into nine stages and each one of the three contractors will undertake three stages. The decision, according to the power corporation was a cautious one made to balance capacity and ensure efficient implementation of the project.
“I am therefore confident to declare to you that the phase 1 will commence from January 2018 and run through to December 2019,” the BPC said further highlighting that the phase will start from Palapye Morupule to Maun then from Maun to Shakawe and connect to Ghanzi. “We will establish a 400 000 waltz back bone transmission, high voltage line.”
Phase 2 of the North West Transmission Grid will be implement from August 2018 and is expected to be completed by October 2020. BPC said it is urgently evaluating the tenders for this phase and should conclude the process by January 2018 and the signing ceremony with successful bidder will be also held publicly.
This second phase will extend the 400kb bridge, starting from Selibe Phikwe to Kasane. The chief Executive Officer of the national power supplier said BPC will increase its human resource capacity including training of stuff over the next 2 years to cater for operations and maintenance to ensure reliable power supply when the grid is fully operational. “We are also here to sign a memorandum of agreement with the Ministry of Minerals and Khoemacau copper mining as we will provide 30 megawatts to the mine and the mine will create employment to 900 people,” concluded the BPC Boss
This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.
The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.
Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.
He was speaking in Parliament on Tuesday delivering Parliament’s Finance Committee report after assessing a motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.
Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.
The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.
The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.
The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.
This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.
Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.
Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.
However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.
Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.
When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.
This as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.
Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.
The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.
Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.
In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.
Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.
Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.
Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.
Acknowledging the need to draw down from GIA no more, current Minister of Finance Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”
He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”