Botswana Power Corporation (BPC) Chief Executive Officer Stefan Schwarzfische has explained government’s decision to give priority to Chinese state owned company China National Electric Equipment Corporation (CNEEC) in the purchasing of the troubled Morupule B plant.
While open tendering process is usually perceived as the best method to adopt in public procurement, government instead chose the selective tendering process in their decision to sell the Morupule B plant. The selective tendering process limits the number of companies which participate in the tendering process.
The newly appointed German national said the decision was taken mainly as mitigation against risks which may arise as a result of the complexity of the project, as well as consideration to issues which surrounded the plant. “Other buyers do not know the plant as much as CNEEC,” he said this week, adding that: “there are risks that come with a project of that nature and they wanted to lessen those risks.”
Schwarzfische revealed that government is expecting a firm offer from CNEEC in the next four weeks. The process of negotiations is expected to drag until the end of year and announcement on the outcome of the negotiations to be made in the first quarter of January 2018, the BPC boss revealed. He further indicated that if the negotiations between government and CNEEC are not successful, government will resort to other options through conducting another bidding process.
“There are certain things we cannot reveal now because we do not want to jeopardise the confidentiality of another partner but if the negotiations fail we will put the sale of Morupule B on tender again,” he explained. It is expected that Morupule B will take at least four years for it to be fully functional as all the four units will go through a testing period of 12 months each.
Morupule B, which was commissioned in 2008 was expected to be fully functional in 2012. As per the agreement of government and contractors Morupule B Power station was supposed to be completed on the following date; 15th January 2012, 15th April 2012, 15th July 2012 and 15th October 2012 for Unit 1, Unit 2, Unit 3 and Unit 4 respectively. However the taking over was completed in May 2014 due to delays. Morupule B was funded by World Bank and African Development Bank (ADB) to the tune of P11 billion becoming the most expensive single project that government has undertaken since independence.
In an unexpected move, in 2016, then Minister of Mineral, Energy and Water Resources, Kitso Mokaila informed parliament about government’s decision to sell Morupule B after liability period. The 24 month liability period which was scheduled to end in June 2016 was extended for the contractor to make good on the outstanding defects, some of which were impacting on the reliability or availability of the power plant, according to government. The decision to sell Morupule B attracted criticism from various quarters, with Leader of Opposition, Duma Boko vehemently opposing the idea of selling such a valuable government asset.
The sale of Morupule B was also opposed by Botswana Congress Party (BCP) which has threatened a lawsuit against government; federation of public sector unions, BOFEPUSU was also opposed to the sale. BOFEPUSU believes the sale of Morupule B to CNEEC will present a security threat for the country. The decision to sell Morupule B was followed by approval private sector participation in the energy sector, and also to establish the regulator by parliament.
This week in a press conference the Minister of Mineral Resource, Energy Security and Green Technology Sadique Kebonang addressed members of the press with the intention of creating conversation with regard to issues surrounding his ministry. Kebonang replaced Mokaila in the ministry following the re-designation of ministries and cabinet reshuffle. The water department has since been moved to Ministry of Lands, Water and Sanitation.
Government is currently sitting on 4 400 vacant posts that remain unfilled in the civil service. This is notwithstanding the high unemployment rate in Botswana which has been exacerbated by the recent outbreak of the deadly COVID-19 pandemic.
Just before the burst of COVID-19, official data released by Statistics Botswana in January 2020, indicate that unemployment in Botswana has increased from 17.6 percent three years ago to 20.7 percent. “Unemployment rate went up by 3.1 percentage between the two periods, from 17.6 to 20.7 percent,” statistics point out.
Leading commercial bank, First National Bank Botswana (FNBB), expects the central bank to sharpen its monetary policy knife and cut the Bank Rate twice in the last quarter of 2020.
The bank expects a 25 basis point (bps) in the beginning of the last quarter, which is next month, and another shed by the same bps in December, making a total of 50 bps cut in the last quarter. According to the bank’s researchers, the central bank is now holding on to 4.25 percent for the time being pending for more informed data on the economic climate.
An audit of the accounts and records for the supply of food rations to the institutions in the Northern Region for the financial year-ended 31 March 2019 was carried out. According to Auditor General’s report and observations, there are weaknesses and shortcomings that were somehow addressed to the Accounting Officer for comments.
Auditor General, Pulane Letebele indicated on the report that, across all depots in the region that there had been instances where food items were short for periods ranging from 1 to 7 months in the institutions for a variety of reasons, including absence of regular contracts and supplier failures. The success of this programme is dependent on regular and reliable availability of the supplies to achieve its objective, the report said.
There would be instances where food items were returned from the feeding centers to the depots for reasons of spoilage or any other cause. In these cases, instances had been noted where these returns were not supported by any documentation, which could lead to these items being lost without trace.
The report further stressed that large quantities of various food items valued at over P772 thousand from different depots were damaged by rodents, and written off.Included in the write off were 13 538 (340ml) cartons of milk valued at P75 745. In this connection, the Auditor General says it is important that the warehouses be maintained to a standard where they would not be infested by rodents and other pests.
Still in the Northern region, the report noted that there is an outstanding matter relating to the supply of stewed steak (283×3.1kg cans) to the Maun depot which was allegedly defective. The steak had been supplied by Botswana Meat Commission to the depot in November 2016.
In March 2017 part of the consignment was reported to the supplier as defective, and was to be replaced. Even as there was no agreement reached between the parties regarding replacement, in 51 October 2018 the items in question were disposed of by destruction. This disposal represented a loss as the whole consignment had been paid for, according to the report.
“In my view, the loss resulted directly from failure by the depot managers to deal with the matter immediately upon receipt of the consignment and detection of the defects. Audit inspections during visits to Selibe Phikwe, Maun, Shakawe, Ghanzi and Francistown depots had raised a number of observations on points of detail related to the maintenance of records, reconciliations of stocks and related matters, which I drew to the attention of the Accounting Officer for comments,” Letebele said in her report.
In the Southern region, a scrutiny of the records for the control of stocks of food items in the Southern Region had indicated intermittent shortages of the various items, principally Tsabana, Malutu, Sunflower Oil and Milk which was mainly due to absence of subsisting contracts for the supply of these items.
“The contract for the supply of Tsabana to all depots expired in September 2018 and was not replaced by a substantive contract. The supplier contracts for these stocks should be so managed that the expiry of one contract is immediately followed by the commencement of the next.”
Suppliers who had been contracted to supply foodstuffs had failed to do so and no timely action had been taken to redress the situation to ensure continuity of supply of the food items, the report noted.
In one case, the report highlighted that the supplier was to manufacture and supply 1 136 metric tonnes of Malutu for a 4-months period from March 2019 to June 2019, but had been unable to honour the obligation. The situation was relieved by inter-depot transfers, at additional cost in transportation and subsistence expenses.
In another case, the contract was for the supply of Sunflower Oil to Mabutsane, where the supplier had also failed to deliver. Examination of the Molepolole depot Food Issues Register had indicated a number of instances where food items consigned to the various feeding centres had been returned for a variety of reasons, including food item available; no storage space; and in other cases the whole consignments were returned, and reasons not stated.
This is an indication of lack of proper management and monitoring of the affairs of the depot, which could result in losses from frequent movements of the food items concerned.The maintenance of accounting records in the region, typically in Letlhakeng, Tsabong, and Mabutsane was less than satisfactory, according to Auditor General’s report.
In these depots a number of instances had been noted where receipts and issues had not been recorded over long periods, resulting in incorrect balances reflected in the accounting records. This is a serious weakness which could lead to or result in losses without trace or detection, and is a contravention of Supplies Regulations and Procedures, Letebele said.
Similarly, consignments of a total of 892 bags of Malutu and 3 bags of beans from Tsabong depot to different feeding centres had not been received in those centres, and are considered lost. These are also not reflected in the Statement of Losses in the Annual Statements of Accounts for the same periods.