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Corruption suspected in P81 million AB tender

Minister of Transport and Communications, Tshenolo Mabeo, and his Permanent Secretary, Neil Fitt, are scheduled to appear before the Parliamentary Committee on Statutory Bodies and Enterprises to explain the illegal award of an P81 million tender at the troubled Air Botswana.

According to evidence given by the Acting Chief Executive Officer (CEO) of Air Botswana, Agnes Khunwane, the tender was given a green light by the Ministry, following the dismissal of the board. The parliamentary committee heard that the board was dismissed on the 24th of November, barely nine days after the management tender committee, chaired by the current acting Khunwane had met.

Khunwane further told the committee that subsequent to the dismissal of the board, she sought the guidance of the ministry, of which she was told by the permanent secretary that, in the absence of the board, the ministry will be in charge of all responsibilities which would have been ordinarily the preserve of the board.

The tender, which was for the provision of engine maintenance services, was awarded on what appears to be a selective tendering process. The tender is for the period of three years and was only ratified by the new board in June, about six months after being awarded and executed.

Committee member and legislator for Gabane-Mmankgodi Major Gen Pius Mokgware was curious that the board was dismissed just few days after the management tender committee had met, and raised suspicion that they could have been prior knowledge that the board was likely to reject the awarding of the tender.

Mokgware said it is reported that the then CEO Ben Dahwa had his own misgivings about the awarding of the tender, as the CEO was of the view that its scope did not reflect what Air Botswana needed.

In other startling revelations, the Acting CEO following awarding of the tender wrote the letter to Ministry requesting them to authorise the awarding of the tender to a European based company.

The Chairperson of the Committee, Samson Guma said it would not be wrong for the parliamentary committee to conclude that the decision to fired the board was taken by the minister, in order to take over the its role and award the tender to his preferred company.

Not only did Guma smell a rat on the action of firing the board, but the manner in which the tender was prepared and awarded. Guma said, the CEO failed to state clearly how the Air Botswana arrived at awarding the tender, and that it has violated the public procurement procedures.

Guma is also of the view that the minster and his permanent secretary have acted illegally by assuming the role of the board, as the most appropriate thing to do would have been appointment of the new board to run the affairs of Air Botswana immediately after the dismissal of the one which was in charge.

The committee was not impressed by the causal manner in which, the acting CEO and the ministry have been conducting the affairs of Air Botswana. The committee heard that, most of the communications, which were official, were done in a verbal manner. The acting CEO was informed of the sacking of the Board verbally, and given instruction to carry out in the same manner.

Khunwane, who said, she also took responsibility, for communicating her inquiries to the ministry verbally, rather than putting it in writing. Khunwane also admitted that in the she sidelined the organisation’s legal officer and did not sought his legal opinion when during the tendering process and engagement of the ministry.

Guma contended that, instead of sending a letter the ministry requesting them to authorise the awarding of the tender, the acting CEO of Air Botswana should had instead, wrote a letter, requesting them to reconstitute a board, because there was a decision which required the approval of the board.

Committee member Dr Phenyo Butale said there is a problematic situation at Air Botswana and the crisis was self-created. He said, the Air Botswana act does not envisage a situation of where the organisation at any point will operate without the board. This was also confirmed by parliamentary counsel, who said, the direct involvement of the ministry in the affairs of Air Botswana was illegal.

Mabeo and Fit will also appear before the committee to explain, the recent transaction regarding the trip to Brazil, in which Air Botswana borrowed the ministry P100 000 to pay for travel expenses of one of the employees who joined the duo for the trip. Ministry had promised to reimburse Air Botswana the money, but failed to do it within the standard 90 days period.

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FaR property assets value clock P1.47 billion

6th December 2023

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.

 

 

 

 

 

 

 

 

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BPC Signs PPA with Sekaname Energy

4th December 2023

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.

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UDC deadlock: Boko, Ndaba, Reatile meet  

4th December 2023

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.

 

 

 

 

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