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BPC gets biggest bite as Gov’t continues to bail out parastatals

Botswana Power Corporation will by beginning of government spending in April 2017 be over a billion pula richer at least on their operations & tariff subsidiary fund, Minister of Finance & Economic Development Kenneth Matambo announced last week in parliament when delivering the national budget speech.


According to Kenneth Matambo the mother ministry of Botswana’s electricity supplier, Mineral Resources, Green Technology and Energy Security will be allocated 2.93 billion, 17.8 % of the total 16.52 billion development budget forecasted for the 2017/18 financial year.
 “The largest share of the development budget is proposed for allocation to the Ministry of Mineral Resources, Green Technology and Energy Security at P2.94 billion or 17.8 percent. This is in recognition that, reliable and efficient sources of energy are a prerequisite for achieving NDP 11 priority area of Development of Diversified Sources of Economic Growth,” said Minister Matambo.


The specially elected National Treasurer explained that the major projects under the ministry would entail Northwest Transition grid, Morupule A power plant rehabilitation and construction of Rakola substation. Furthermore Matambo revealed that under the ministry P2.94 billion, the financially ailing Botswana Power Corporation will be allocated a whooping 1.46 billion pula to splash on their operation cost. Matambo‘s proposition comes at a time when parastatals are dismally failing to recover their operational costs and continue to make perennial losses.


Last year‘s final parliament sitting which debated the National Development Plan 11 Minister Matambo announced a total of  over 2 billion to  be owed to  government by losing making parastatals as unserviced loans and zero dividends pay  . Botswana Corporation which hasn’t being an exception led the loss making parastatals in 2014 with P1.25 billion loss “Furthermore, it is proposed that the Botswana Power Corporation be allocated an amount of P1.46 billion to cover operational costs,” he said, explaining that it was imperative to allot such funds to BPC considering its transition quest and current operation expenditure to keep the electricity tariffs as affordable to ordinary Batswana” With the operation cost increasing due high expenses in maintaining the plants , refurbishing  power station components and keeping up with increasing equipment prices,” said Matambo.


Botswana Corporation has been making losses  and receiving bail out for the past financial years, in 2014 the Auditor General reported a loss of P1.25billion for BPC, incurred from P4.48  billion expenses which exceeded P3.23billion income , a balance sheet which government enclave resolved by a bail out billions of pulas  for Batswana to continue receiving electricity at affordable tariffs.


Again in 2015 according to Botswana Power Corporation Annual report the corporation registered a loss before tariff subsidiary Grant  of P1.986 billion, in a bid to reduce the corporation losses BPC adjusted their tariff charges beginning of 2015 , a move which saw average consumer price rise to 61 thebe per kWH an increase which was added on top of the previous year’s 10 percent hike.

 

Charges for Small scale business consuming  500kWh or less per month were increased by 10 %  while 17.5 increase was applied for those consuming more than 500kWh.The corporation which heavily relies on Eskom for electricity supply after the failure of Morupule B was allocated P1.5 billion for tariff subsidiary and some operational cost during the 2015/16 financial years.


It incurred a net loss of P2.60 billion in 2015 compared to P1, 37 billion net losses in 2014 before a tariff subsidy grant of P2.33 billion. In 2016  BPC financial year which is currently  under review, Motlakase house already recorded a loss  P274.91 million which is a result of expenses amounting to over  P5.63 billion against the income of P5.36 billion, For 2016/17 financial year which ends in April, government allocated BPC a tariff subsidy and emergency power grant of P2.33 billion.


otswana Power Corporation which is now under the stewardship of  Sweden national Dr Schwarzfischer is reported to be moving into massive restructuring , a move that will see over 200 employees no longer on the corporation ‘s payroll when government spending begins in April 2017 for this financial year, sources from the January 23rd BPC media briefing reveal.

 

The national subsidized electricity provider which end of last year adopted a new strategy called Masa 2020 that intends to make it a profit making power distributor is said to be looking at relieving over 1000 employees off duties before the end of this year in a restructuring pursuit that will exe 50 % of over  2000 staff.


Currently Botswana Corporation is embattled with uncollected debts, non-performing assets, lack of borrowing capacity, amongst other challenges. BPC’s debtors currently seat at over P557 million from last year‘s over 400 million, largely due to non-payment of power bills by struggling mining companies choked by the international commodities crunch.

 

Talking of struggling mining companies, Botswana Power Corporation is reported to be one of highest BCL debtors, the corporation had BCL as its largest single consumer of its services, at least from the private sector. BCL is currently going through provisional liquidation. However there are reports that an Emirates company wants to buy the mine.


The budget speech which is  currently debated in parliament also indicate that solar energy will be allocated a significant funding to facilitate the country’s quest to shift from non renewable energy, a source of energy which proves to be unreliable and costly as evident to poor financial figures by the country’s national power supplier. Besides extending Morupule B with units 5 and 6 and Refurbishment of Morupule A Power Plant as additional power sources, the use of solar energy has been identified as a potential alternative source of electricity supply in the country,” It reads.


According to Minister Matambo It was against this background that a comprehensive renewable energy strategy which is aimed at attracting domestic and foreign investments is being developed, and will be completed by February, 2017. Further, Government, in collaboration with the German Agency for International Cooperation is undertaking a Green Energy Feasibility Study aimed at providing alternative sources of electricity.  


Water tariffs hike by April 2017

Mean while Water Utilities Corporation, another financially troubled state owned enterprise which is also undergoing business remodeling and administrative restructuring has announced that by April 2017 its services charge tariffs will go up.
According to Assistant Minister of Land Management, Water and Sanitation Services, Mr Itumeleng Moipisi water tariffs were increased by 10 per cent in 2012 and 15 per cent in 2013.

 

He indicated that the tariff would increase by 25 per cent for government and 15 per cent for domestic and business effective from April 1. The national water services provider Water Utilities Corporation is no exception from perennial loss making parastatals, in 2015 the corporation recorded a net loss of 367.0 million from 361.0 million in 2014.


Finance Mister Matambo however informed parliament of slightly positive news on Monday when delivering the budget speech that the Ministry of Land Management, Water and Sanitation Services will be allocated the second largest share of development budget at P2.80 billion, or 17.0 percent. According to Matambo this amount will be used for implementation of water projects inclusive of the North-South Carrier II to supply water to the Southern part of the country and reticulation of water from the Thune Dam to nearby villages.


 “Following the construction of a parallel pipeline to the existing line under the North-South Water Carrier Scheme, Government will fund the construction of various pipelines such as the ones connecting Thune Dam to Mathathane, Tsetsebye and Moletemane, which is expected to be completed in 2018, and the other connecting Kanye and Molepolole to the North South Carrier” he said.

 

Besides the implementation of emergency water projects throughout the country, other major water projects planned for 2017/2018 financial year include the rehabilitation of Shakawe Water Treatment Plant and its connection to Seronga, Gunotsoga, Beetsha and Gudigwa villages. In the mist of water tariff hikes all these projects are expected to provide adequate water supply to furfarial villages.”

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Over 2 000 civil servants interdicted

6th December 2022

Over 2,000 civil servants in the public sector have been interdicted for a variety of reasons, the majority of which are criminal in nature.

According to reports, some officers have been under interdiction for more than two years because such matters are still being investigated. Information reaching WeekendPost shows that local government, particularly councils, has the highest number of suspended officers.

In its annual report, the Directorate on Corruption and Economic Crime (DCEC) revealed that councils lead in corrupt activities throughout the country, and dozens of council employees are being investigated for alleged corrupt activities. It is also reported that disciplined forces, including the Botswana Defence Force (BDF), police, and prisons, and the Directorate of Intelligence and Security (DIS) have suspended a significant number of officers.

The Ministry of Education and Skills Development has also recorded a good number of teachers who have implicated in love relationships with students, while some are accused of impregnating students both in primary and secondary school. Regional education officers have been tasked to investigate such matters and are believed to be far from completion as some students are dragging their feet in assisting the investigations to be completed.

This year, Mmadinare Senior Secondary reportedly had the highest number of pregnancies, especially among form five students who were later forcibly expelled from school. Responding to this publication’s queries, Permanent Secretary to the Office of the President Emma Peloetletse said, “as you might be aware, I am currently addressing public servants across the length and breadth of our beautiful republic. Due to your detailed enquiry, I am not able to respond within your schedule,” she said.

She said some of the issues raised need verification of facts, some are still under investigation while some are still before the courts of law.

Meanwhile, it is close to six months since the Police Commissioner Keabetwe Makgophe, Director General of the Directorate on Corruption and Economic Crime (DCEC) Tymon Katlholo and the Deputy Director of the DIS Tefo Kgothane were suspended from their official duties on various charges.

Efforts to solicit comment from trade unions were futile at the time of going to press.

Some suspended officers who opted for anonymity claimed that they have close to two years while on suspension. One stated that the investigations that led him to be suspended have not been completed.

“It is heartbreaking that at this time the investigations have not been completed,” he told WeekendPost, adding that “when a person is suspended, they get their salary fully without fail until the matter is resolved”.

Makgophe, Katlholo and Kgothane are the three most high-ranking government officials that are under interdiction.

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Masisi to dump Tsogwane?

28th November 2022

Botswana Democratic Party (BDP) and some senior government officials are abuzz with reports that President Mokgweetsi Masisi has requested his Vice President, Slumber Tsogwane not to contest the next general elections in 2024.

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African DFIs gear to combat climate change

25th November 2022

The impacts of climate change are increasing in frequency and intensity every year and this is forecast to continue for the foreseeable future. African CEOs in the Global South are finally coming to the party on how to tackle the crisis.

Following the completion of COP27 in Egypt recently, CEOs of Africa DFIs converged in Botswana for the CEO Forum of the Association of African Development Finance Institutions. One of the key themes was on green financing and building partnerships for resource mobilization in financing SDGs in Africa

A report; “Weathering the storm; African Development Banks response to Covid-19” presented shocking findings during the seminar. Among them; African DFI’s have proven to be financially resilient, and they are fast shifting to a green transition and it’s financing.

COO, CEDA, James Moribame highlighted that; “Everyone needs food, shelter and all basic needs in general, but climate change is putting the achievement of this at bay. “It is expensive for businesses to do business, for instance; it is much challenging for the agricultural sector due to climate change, and the risks have gone up. If a famer plants crops, they should be ready for any potential natural disaster which will cost them their hard work.”

According to Moribame, Start-up businesses will forever require help if there is no change.

“There is no doubt that the Russia- Ukraine war disrupted supply chains. SMMEs have felt the most impact as some start-up businesses acquire their materials internationally, therefore as inflation peaks, this means the exchange rate rises which makes commodities expensive and challenging for SMMEs to progress. Basically, the cost of doing business has gone up. Governments are no longer able to support DFI’s.”

Moribame shared remedies to the situation, noting that; “What we need is leadership that will be able to address this. CEOs should ensure companies operate within a framework of responsible lending. They also ought to scout for opportunities that would be attractive to investors, this include investors who are willing to put money into green financing. Botswana is a prime spot for green financing due to the great opportunity that lies in solar projects. ”

Technology has been hailed as the economy of the future and thus needs to be embraced to drive operational efficiency both internally and externally.

Executive Director, bank of Industry Nigeria, Simon Aranou mentioned that for investors to pump money to climate financing in Africa, African states need to be in alignment with global standards.

“Do what meets world standards if you want money from international investors. Have a strong risk management system. Also be a good borrower, if you have a loan, honour the obligation of paying it back because this will ensure countries have a clean financial record which will then pave way for easier lending of money in the future. African states cannot just be demanding for mitigation from rich countries. Financing needs infrastructure to complement it, you cannot be seating on billions of dollars without the necessary support systems to make it work for you. Domestic resource mobilisation is key. Use public money to mobilise private money.” He said.

For his part, the Minster of Minister of Entrepreneurship, Karabo Gare enunciated that, over the past three years, governments across the world have had to readjust their priorities as the world dealt with the effects and impact of the COVID 19 pandemic both to human life and economic prosperity.

“The role of DFIs, during this tough period, which is to support governments through countercyclical measures, including funding of COVID-19 related development projects, has become more important than ever before. However, with the increasingly limited resources from governments, DFIs are now expected to mobilise resources to meet the fiscal gaps and continue to meet their developmental mandates across the various affected sectors of their economies.” Said Gare.

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