The Minister of Minerals Energy and Water Resources, Kitso Mokaila could find himself between a rock and a hard place as he is likely to make a decision on whether he takes up a proposed Water sector ministry or he shafts himself to the back bench.
Early indications are that the hard working minister is not a fan of the proposed breakaway Ministry because of its plethora of problems with the compounding nag being lack of financial resources.
With President Lt Gen Dr Ian Khama expected to announce a cabinet reshuffle soon after the adoption of proposed names of two additional Members of Parliament, Mokaila’s current Ministry is expected to be one of the major catalysts in the reshuffle as it will be split.
According to information gathered by this publication Mokaila is not interested in leading a broke Ministry. With the latest budget strategy paper released by the Ministry of Finance and Development Planning painting an unfavourable budgeting environment, and projecting a deficit, cash injection into the financially limping Water Utilities Corporation (WUC) is almost a nullity. WUC is expected to the anchor parastatal of the newly proposed Ministry.
Close associates of the Minister have revealed that he would rather be a member of the ruling Botswana Democratic Party’s back bench. “The lack of financial resources to support some of the envisaged projects in the water sector seems to be a stumbling block for him. He prefers the minerals and energy sector, which he believes have gone through teething problems but prospects for financing some projects in this sector are promising. The lack of financing in the water sector is almost a setup for failure,” said a BDP Member of Parliament who sympathises with Mokaila.
Another Ministry which will carry the cash loaded sectors of mining and energy is likely to be given to one of the two people who will be adopted by Parliament as additional Specially Elected legislators. The capitalisation of projects under the two sectors is known to be steep but prospects for success in securing funders are always positive. Mokaila, should he take up the Water Ministry will also be tasked with dealing waste water issues, and currently the WUC needs serious capitalisation to effectively carry out the function.
THE CONUNDRUM FACING WUC
WUC needs a whopping P170 billion to contain the water crisis threatening Botswana. This is contained in a report from a study that was sanctioned by President Lt. Gen. Ian Khama that WUC carry out a “comprehensive assessment of water and wastewater situation” in the country.
According to the report, which was presented to not only Minister of Minerals, Energy and Water resources (MMEWR) but also to a full cabinet last year, WUC conceded that “the water situation requires immediate attention with huge resources.” The total amount of P170 billion is divided between water and wastewater interventions as well as among short, medium and long term.
For water, the government will need P165 billion while for waste water a total of close to P5 billion will be required. Botswana’s budget as presented by Minister of Finance and Development Planning Kenneth Matambo last year stood at a sum of P11 billion and it remains to be seen where government will source out the P170 billion to totally control the water situation in the country. The latest projection by the Ministry of Finance predicts a deficit as well.
Some sources in the top management at WUC had told this publication that efforts will be made to rope in private sector to contribute in the water security as a development process of the country. Some of the top priority projects North-South carrier scheme upgrading works estimated at P1.53 billion (funding available) and to be implemented from now till February 2017.
There will also be a North-South carrier 2.2 pipeline and associated works, Gaborone Wastewater reclamation plant, and Chobe Zambezi water transfer scheme at 66 billion and to take close to 7 years but funds are not available. Other projects include Gaborone master plan, Lobatse Masterplan, refurbishment of Mambo wastewater treatment works as well as Boteti southern and central cluster which will cost around 4 billion and 3 years.
According to the report, some projects include national water loss control project, Letlhakane wastewater, north East and Tutume sub district, and Selibe Phikwe Serule Transfer Scheme which are scheduled to take around 3 years at the cost of 3 billion – are also in the plan of the projects.
The executive was also reminded that some of the action points should be to “develop and enhance water governance – development of trade effluent agreement, development of the regulator, enhancement of institutions.” The report suggests that there is need to profile consumers against water quality required, citing Agriculture and mining requiring less potable water for their operations.
“Reinforcing the culture of conversation and demand management emphasising on huge consumers recycling water – this include institutions such as BMC, boarding schools, and, build water efficiency into building codes with all households urged to have rain water harvesting.”
The report analysed the 16 management centres across the country, national surface and groundwater sources versus demand clusters prior to the 2008 water sector reforms. Cabinet was told that “only 2 management centres of Kanye and Lobatse are in a bad situation whilst Ghanzi, Tsabong and Masunga require closer monitoring – as their situation is also undesirable. Generally the country reflects a healthy view with regards to water sources.
Through the map, WUC illustrated that the Maun, Ghanzi, Lobatse and Kanye management centres have acute water supply deficit of more than 30%. “Basically the picture reflects extreme infrastructure deficits generally throughout the country.
It was also highlighted that many parts of the country experience serious water loss ranging from 16 – 58% and these include parts of Tsabong, Kanye, Lobatse, Molepolole, Ghanzi, Maun, Kasane, Masunga, Serowe and Mochudi. The only areas that have acceptable water losses are Gaborone, Palapye, Francistown, Selebi Phikwe and Letlhakane management centres.
The report further states that areas currently with conventional sewerage system are: Maun, Gaborone, Kasane, Ghanzi, Francistown, Selibe Phikwe, Tonota, Palapye, Serowe, Mahalapye, Shoshong, Bobonong, Mochudi, Mogoditshane, Tlokweng, Gabane, Lobatse, Goodhope, Jwaneng, Ramotswa and Orapa.
“Out of these only Gaborone, Francistown, Jwaneng and Selibe Phikwe have huge potential for reclamation.” However they need to be refurbished and upgraded to improve efficiency, report says.
The study found that Trade Effluent Agreements need to be put in place to ensure pre-treatment prior to discharging into the system – Botswana Meat Commission (BMC), tannery, poultry, textiles are cited as examples in the report. Effluent currently being discharged into the environment should be further treated for re-use.
It is understood that the total quantity that can be reclaimed from these systems is 50% as minimum of treatment plant capacity.
FaR Property Company (FPC) Limited, a property investment company listed on the Botswana Stock Exchange, has recently announced its exceptional financial results for the year 2023. The company’s property asset value has risen to P1.47 billion, up from P1.42 billion in the previous year.
FPC has a diverse portfolio of properties, including retail, commercial, industrial, and residential properties in Botswana, South Africa, and Zambia. The company owns a total of 186 properties, generating rental revenues from various sectors. In 2023, the company recorded rental revenues of P11 million from residential properties, P62 million from industrial properties, and P89 million from commercial properties. Overall, the company’s total revenues increased by 9% to P153 million, while profit before tax increased by 22% to P136 million, and operating profit increased by 11% to P139 million.
One notable achievement for FPC is the low vacancy rate across its properties, which stands at only 6%. This is particularly impressive considering the challenging trading environment. The company attributes this success to effective lease management and the leasing of previously vacant properties in South Africa. FPC’s management expressed satisfaction with the results, highlighting the resilience of the company in the face of ongoing macroeconomic challenges.
The increase in profit before tax can be attributed to both an increase in income and effective control of operating expenses. FPC managed to achieve these results with fewer employees, demonstrating the company’s efficiency. The headline earnings per linked unit also saw an improvement, reaching 26.92 thebe, higher than the previous year.
Looking ahead, FPC remains confident in its competitiveness and growth prospects. The company possesses a substantial land bank, which it plans to develop strategically as opportunities arise. FPC aims for managed growth, focusing on consumer-driven developments and ensuring the presence of supportive tenants. By maintaining this approach, the company believes it can sustainably grow its property portfolio and remain competitive in the market.
In terms of the macroeconomic environment, FPC noted that inflation rates are decreasing towards the 3% to 6% range approved by the Bank of Botswana. This is positive news for the company, as it hopes for further decreases in interest rates. However, the fluctuating fuel prices, influenced by global events such as the war in Ukraine and oil output reductions by Russia and other Middle Eastern countries, continue to impact businesses, including some of FPC’s tenants.
FPC’s property portfolio includes notable assets such as a shopping mall in Francistown with Choppies Hyper as the anchor tenant, Borogo Mall located on the A33 main road near the Kazungula ferry crossing, and various industrial and commercial properties in Gaborone leased to Choppies, Senn Foods, and Clover Botswana. The company also owns a shopping mall in Mafikeng and Rustenburg in South Africa.
The majority of FPC’s properties, 85%, are located in Botswana, followed by 12% in South Africa and 3% in Zambia. With its strong financial performance, competitive position, and strategic land bank, FPC is well-positioned for continued growth and success in the property market.
The Botswana Power Corporation (BPC) has taken a significant step towards diversifying its energy mix by signing a power purchase agreement with Sekaname Energy for the production of power from coal bed methane in Mmashoro village. This agreement marks a major milestone for the energy sector in Botswana as the country transitions from a coal-fired power generation system to a new energy mix comprising coal, gas, solar, and wind.
The CEO of BPC, David Kgoboko, explained that the Power Purchase Agreement is for a 6MW coal bed methane proof of concept project to be developed around Mmashoro village. This project aligns with BPC’s strategic initiatives to increase the proportion of low-carbon power generation sources and renewable energy in the energy mix. The use of coal bed methane for power generation is an exciting development as it provides a hybrid solution with non-dispatchable sources of generation like solar PV. Without flexible base-load generation, the deployment of non-dispatchable solar PV generation would be limited.
Kgoboko emphasized that BPC is committed to enabling the development of a gas supply industry in Botswana. Sekaname Energy, along with other players in the coal bed methane exploration business, is a key and strategic partner for BPC. The successful development of a gas supply industry will enable the realization of a secure and sustainable energy mix for the country.
The Minister of Minerals & Energy, Lefoko Moagi, expressed his support for the initiative by the private sector to develop a gas industry in Botswana. The country has abundant coal reserves, and the government fully supports the commercial extraction of coal bed methane gas for power generation. The government guarantees that BPC will purchase the generated electricity at reasonable tariffs, providing cash flow to the developers and enabling them to raise equity and debt funding for gas extraction development.
Moagi highlighted the benefits of developing a gas supply industry, including diversified primary energy sources, economic diversification, import substitution, and employment creation. He commended Sekaname Energy for undertaking a pilot project to prove the commercial viability of extracting coal bed methane for power generation. If successful, this initiative would unlock the potential of a gas production industry in Botswana.
Sekaname Energy CEO, Peter Mmusi, emphasized the multiple uses of natural gas and its potential to uplift Botswana’s economy. In addition to power generation, natural gas can be used for gas-to-liquids, compressed natural gas, and fertilizer production. Mmusi revealed that Sekaname has already invested $57 million in exploration and infrastructure throughout its resource area. The company plans to spend another $10-15 million for the initial 6MW project and aims to invest over $500 million in the future for a 90MW power plant. Sekaname’s goal is to assist BPC in becoming a net exporter of power within the region and to contribute to Botswana’s transition to cleaner energy production.
In conclusion, the power purchase agreement between BPC and Sekaname Energy for the production of power from coal bed methane in Mmashoro village is a significant step towards diversifying Botswana’s energy mix. This project aligns with BPC’s strategic initiatives to increase the proportion of low-carbon power generation sources and renewable energy. The government’s support for the development of a gas supply industry and the commercial extraction of coal bed methane will bring numerous benefits to the country, including economic diversification, import substitution, and employment creation. With the potential to become a net exporter of power and a cleaner energy producer, Botswana is poised to make significant strides in its energy sector.
It is not clear as to when, but before taking a festive break in few weeks’ time UDC leaders would have convened to address the ongoing deadlock surrounding constituency allocation in the negotiations for the 2024 elections. The leaders, Duma Boko of the UDC, Mephato Reggie Reatile of the BPF, and Ndaba Gaolathe of the AP, are expected to meet and discuss critical matters and engage in dialogue regarding the contested constituencies.
The negotiations hit a stalemate when it came to allocating constituencies, prompting the need for the leaders to intervene. Representatives from the UDC, AP, and BPF were tasked with negotiating the allocation, with Dr. Patrick Molotsi and Dr. Philip Bulawa representing the UDC, and Dr. Phenyo Butale and Wynter Mmolotsi representing the AP.
The leaders’ meeting is crucial in resolving the contentious issue of constituency allocation, which has caused tension among UDC members and potential candidates for the 2024 elections. After reaching an agreement, the leaders will engage with the members of each constituency to gauge their opinions and ensure that the decisions made are favored by the rank and file. This approach aims to avoid unnecessary costs and conflicts during the general elections.
One of the main points of contention is the allocation of Molepolole South, which the BNF is adamant about obtaining. In the 2019 elections, the UDC was the runner-up in Molepolole South, securing the second position in seven out of eight wards. Other contested constituencies include Metsimotlhabe, Kgatleng East and West, Mmadinare, Francistown East, Shashe West, Boteti East, and Lerala Maunatlala.
The criteria used for constituency allocation have also become a point of dispute among the UDC member parties. The issue of incumbency is particularly contentious, as the criterion for constituency allocation suggests that current holders of UDC’s council and parliamentary seats should be given priority for re-election without undergoing primary elections. Disadvantaged parties argue that this approach limits democratic competition and hinders the emergence of potentially more capable candidates.
Another disputed criterion is the allocation based on the strength and popularity of a party in specific areas. Parties argue that this is a subjective criterion that leads to disputes and favoritism, as clear metrics for strength and visibility cannot be defined. The BNF, in particular, questions the demands of the new entrants, the BPF and AP, as they lack a traceable track record to support their high expectations.
The unity and cohesion of the UDC are at stake, with the BPF and AP expressing dissatisfaction and considering withdrawing from the negotiations. Therefore, it is crucial for the leaders to expedite their meeting and find a resolution to these disputes.
In the midst of these negotiations, the BNF has already secured 15 constituencies within the UDC coalition. While the negotiations are still ongoing, BNF Chairman Dr. Molotsi revealed that they have traditionally held these constituencies and are expecting to add more to their tally. The constituencies include Gantsi North, Gantsi South, Kgalagadi North, Kgalagadi South, Good Hope – Mmathethe, Kanye North, Kanye South, Lobatse, Molepolole North, Gaborone South, Gaborone North, Gaborone Bonnignton North, Takatokwane, Letlhakeng, and Tlokweng.
The resolution of the contested constituencies will test the ability of the UDC to present a united front in the 2024 National Elections will depend on the decisions made by the three leaders. It is essential for them to demonstrate maturity and astuteness in resolving the constituency allocation deadlock and ensuring the cohesion of the UDC.